I’m no expert, but I think FSD is on to the answer.
You don’t need to foreclose if you can sell and cover your loan.
Foreclosures are by nature a vicious downward sprial that will force prices to the bottom, determined eventually by how many people are in houses they shouldn’t be in, and at what point enough people are able to start buying those empty houses.
You can see why Gov’t intervention is so problematic. Keeping property values high means someone still has to be able to afford the house.
Bailing people out with lower interest rates and write-downs does nothing to help inventory or future buyers.
Prices will fall until they reach an equilibrium of the historical price to income ratio. Even then, prices will probably overshoot. They did before.