Any bank will gladly take back a house that they only loaned 50% of it current value. Think about it. The downside risk is minimal at this point in the market. Loan out 100K on a 200K house. If the borrow defaults they sell it for $175 and make a PROFIT of $75k. Not a bad return on investment. I am simplifing the numbers and I know there are other expenses involved. However, it is still a pretty good bet. I would approve it if I was the bank president.