Not only more leveraged, but with significantly more dangerous debt terms (construction loans that need to be refinanced after 12 - 18 months and, in the multi family space, interest-only ARMs — remember those? - are common.)
Was that really any different than anyone else in the 2008-2012 market unless they wanted to take a massive loss?
Another outcome is the banks take back the properties en masse (happened in the early '80s during the last inflation scare, and also in '08) and slowly sell off the properties to investors in REO[0] auctions.
0 - REO or "real estate owned" is what banks call properties they've foreclosed on and taken ownership of. They generally want to get these properties off their books as quickly as possible and in the past have been willing to sell them at or below their cost basis.