Every bank has its own sets of policies in cases such as these and it also hinges on who handles the case and the degree of responsibility invested in your banker be it at a branch or personal level. A lot has to do with risk assessment at a given point and if they feel they can recover their loss without foreclosing so be it. Not all that cut and dried and quite surprisingly if payments are maintained they may allow a cocktail of loans whilst still holding all the cards.They can actually be quite reasonable believe it or not.
Again just not straight forward as it is often portrayed.
