You could take a loan with your house as collateral if you are more certain than your loan-giver that you will not default. If a bank tries to give people loans based on the probability they determine that you default, some of the population will happen to know their probability of defaulting to be underestimated, and take a loan at a profit. The bank would rather have their “fraudulent customers” be the ones that pay back loans more often than expected.
No, the whole point of using a house as collateral is that the bank only loses money if you default and the asset depreciates by more than the (loan size/house value) ratio.
Edit: Epistomological status: armchair reasoning
You could take a loan with your house as collateral if you are more certain than your loan-giver that you will not default. If a bank tries to give people loans based on the probability they determine that you default, some of the population will happen to know their probability of defaulting to be underestimated, and take a loan at a profit. The bank would rather have their “fraudulent customers” be the ones that pay back loans more often than expected.
No, the whole point of using a house as collateral is that the bank only loses money if you default and the asset depreciates by more than the (loan size/house value) ratio.