The loan agreement, together with the offer letter, sets out the contractual agreement between the bank lender and the borrower. Most loan agreements contain very stringent terms and conditions favoring the bank, including in most cases, the right to reevaluate the property value. In the event of a sharp drop in property prices such that the outstanding loan exceeds the current property value, you may be asked to provide additional collateral, or even pay off more of the loan principal, to reduce the bank's over exposure. If you do not comply, it will constitute an event of default whereby your entire loan may be recalled.

Whatever action taken by the bank must be lawful and within the contractual loan terms. The bank can exercise discretion to give forbearance, or not at all. So a friendly and understanding bank is a better friend in difficult times. It's not all about cheapest interest rates, longest terms or highest loan/value ratios.