Most lenders already know how risky a particular loan is. They know the predicted default rate and price the credit accordingly, including the sell-on value. Re

Most lenders already know how risky a particular loan is. They know the predicted default rate and price the credit accordingly, including the sell-on value. Reducing the sell-on value won't make them "more careful", it will just make them price the credit higher. That may make the very, very bottom tier of borrowers unable to borrow--maybe--but it doesn't prevent the vast amount of borrowers from getting a loan. It just makes it more expensive.