Depends on the state. If the bank has more recorse to get their money, fine. But if the house is all there is, it’s plan b. It’s why banks used to require 20% down. They would always come out ahead if the person exercised plan b.
Banks do not get the 20% down money. The seller gets that. The money down is just to protect the collateral value somewhat. But it is not plan b. Your sister is passing off her misfortune on the bank by defaulting on her loan. She wants a no risk investment where if thing so bad, she can stick it to someone else. May she never ever get another loan.
Does she pay her credit cards? Her car loans? Or will that be one day inconvenient for her as well?
You can justify defaulting on a loan by calling it plan b. Lots of people do. But it is greed and dishonesty that justifies oneself that way. The truth does not change. Your sister is stealing money to recover her own loss and now squatting on someone else’s property.