“Default”, “option”. You say potato, I say potahto.
It’s a clause of the contract that all agreed to.
No no no....it is not a clause all agreed to. It is the contract in DEFAULT by one party. Your sister failed to meet the terms of the contract so the Bank is able to take back the property. That is not just semantics. Your sister is in default. She has broken the terms of the contract. The bank has to try and recover its loss.
Reminds me of a neighbor I had who used to excuse shoplifting by saying the business just wrote it off.