For example...a $90k balloon loan for thirty years at 10% would have a monthly payment of @ $750 whereas the same loan for 15 years might have a monthly payment of @ $1,200. The buyer takes the thirty year to get the lower payment but must pay-off all the loan in payment number 181. That outstanding amount would be @ $78k.
The buyer is gambling that he will be able to refinance the $78k at a lower rate. If he can't he is screwed.
Multiply all of your numbers by 10 and you have a very typical Bay Area mortgage scenario. The usual reset or balloon payment is 3 to 5 years out, though.
After 15 years, almost ANY market would have some appreciation. Not being able to refinance that 78k would be due to credit or employment issues only, and worse came to worse, they COULD extend back to 30 years in the rare instance they couldn't afford any other option.
A fifteen-year balloon is NOT the same as the types of loans we're talking about here.
Hardly anyone does balloons anymore anyway.