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Hmm.. don't people tend to borrow against their houses? If housing prices fall 10-20%, people with poor risk management might get effectively margin called, forcing them to liquidate, which becomes a contagion event.

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Mortgages are typically issued as non-recourse loans. This may not be true for HELOCs or other risky equity loans, but usually your lender can’t seize your home unless you haven’t been paying monthly.

Foreclosure takes many months.

I'm pretty sure HELOCs can be called any, iirc, but I'm not sure if fail to pay the call means they put a lien on your house or force you into foreclosure.

When people say "you should buy real estate as an investment because you can't live in your brokerage account" and then do crazy stuff with their equity that they wouldn't even dream of when investing (e.g. Boglehead investors who HELOC for some net negative remodel) it really blows my mind...

HELOCS cannot be called, but they can be frozen, preventing further borrowing, or have their borrowing limits reduced.

You're on the right track. There won't be a margin call, but deflating/stagnant values and high interest rates prevent these lines of credit from being established. This is what causes the overall economic slowdown in the US. People use these HELOCs for all sorts of spending they can't afford otherwise.

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