Originally Posted by
BlackPeter
I am not a lawyer and didn't yet analyse a REL contract either. However - based on the information I have seen (e.g. a report in Consumer) does this last option not exist for the bank. The existing REL contracts explicitly guarantee the homeowner that they can stay in their house for life, no matter whether the house equity drops below the drawn loan.
It is the job of the bank to make sure they stay on the cautious side when approving the loan ... and if they err, they have to take that on their balance sheet.