Those who think that the damage to society from people engaging in these money-for-nothing schemes is concentrated on rich fat bankers who deserve it should think again – most of the damage will be paid for, through govt intervention, by other taxpayers and savers (using future inflation as a silent but very effective tax on savers). Banks are already almost all insolvent. Any additional losses caused by this kind of unethical (but legal) behavior will have to be made up for by the government, who will take it from some of us.
As for the “threat” about trashing the kitchen: I am sure the FA was smart enough to phrase it more subtly while still communicating very effectively how much power the homeowner had to reduce the value of the collateral in a way that would make it impractical for the bank to prosecute.