Not generally true. However, there is some credence to this, in that some of the govmt owned Banks are currently underprovided on their mortgage book. Sale of a property in negative equity would crystalise a loss that has not been provided for. Unfortunately, this can cause problems for some debtors who genuinely want to sell their properties and is not good banking practise. However, as in the example above, a good solicitor could take the Bank to task & I can see why a Bank would cave in against a threatened legal case.