Al, say a house costs 100 bucks (to simplify things a bit, housing isn't that cheap here =P). To get a loan here, you need like 10-15 bucks of own money saved up, so you need a 85 buck loan. The house is worth 100 bucks, so 70% of that is 70, meaning you need to come up with an additional 15 for security from somewhere, like your car, stock, another property or whatever. Then, if everything goes to heck and you lose the house, and let's say you haven't yet paid off anything, forfeiting the house to the bank only covers the 70% of the value, meaning you still owe the bank the 15 bucks that's left of the 85 you borrowed. So either you gotta also forfeit the other property you put up as security, or figure out some other way to pay off the rest of your debt. Crappy for bad situations, but on the other hand it leads to more stable banks, and maybe works as an incentive to not buy overly priced property, and also keeps the prices down a bit.