A) Most banks dont own the loans they underwrite.
B) The shareholders would crucify the bank, and this would lead to tightening underwriting standards (and/or less loans purchased in the secondary markets, which means higher interest rates).
C) Either way you get higher interest rates and tighter underwriting standards for purchases moving forward. Which means you will sales will drop even more.
This may save some homeowners and prop up prices somewhat, but the cost will be transactional with realtors bearing the brunt.