Any buffer vanishes as prices fall = buyers pull back and wait for the dust to settle = a downwards cascade that can consume all equity= underwater, and buyer d

Any buffer vanishes as prices fall = buyers pull back and wait for the dust to settle = a downwards cascade that can consume all equity= underwater, and buyer does not want to bail out a sunken ship. Lenders have recourse to whatever other assets the buyer has(depends on fine print, LLC etc) and some lenders sell at auction right away, some set a reserve below which they rent the home and the banks usually have management departments to manage that, but each case differs.