Regarding A, do banks ever make "margin calls" when homes drop in value? I mean, force people to sell even though those people have an income and are making mortgage payments? (If so, why, when the mortgage income, if it continues, is worth more than what they can get from the foreclosure?)
I can't speak for every situation, but I know that my mortgage doesn't include any terms like that. The bank could foreclose and sell the property only if I stopped making mortgage payments.
I think that what you're describing would be termed a "technical default", and would require a clause called an "affirmative covenant".
