The guy who asked to borrow the money should absorb the loss since he was the gambler who lost it.
And yes, I have bought many properties and I know exactly what I signed. And even if I didn’t know what I signed whose fault is that?
The banks set the interest rates for the loan and use the value of the home as collateral, which is why it is appraised. And as you know, on a thirty year loan most of your initial payments are interest rather than principle and you pay much more over the length of the loan in interest than the actual amount of the loan.
You are responsible for what you signed and so is the bank. You know the conditions of the loan and the penalties should you fail to meet those conditions. The bank can take possession of the house if you don't pay your mortgage payments.