Those loans aren’t THAT rare. There are a lot of borrower who are subject to those terms but who don’t realize it. It’s like the credit card companies that have the right to jack up the interest rate on your CC if you fall behind with one of your other creditors.

It’s extremely unlikely that a lender would foreclose on a property just because the borrower is upside down. Some of those borrowers will soldier on anyway. The lenders truly don’t want to be in the business of owning and selling RE assets. They’ll only foreclose if they think they have no other recourse for getting paid. The process of foreclosure itself costs them a lot of money, as does the maintenance and marketing.