What do the lenders do when the owner can't make the loan payments because he is not taking in enough rent? They don't want to own vacant property, and they don't want to own delinquent loans.
This means he will need to refinance at a reduced asset value, which means either the loan isn't refinanced or at a higher risk (rate).
Interest rates are high now, but those new rates don't kick in until the loans hit their maturity dates. As rate are kept high, more loans will refinance to higher rates and more of these borrowers will go under.
Doesn't that cause a repossession?
So the banks somehow pushed a minimum rent clause to the mortgages, and now they're going to win big by repossessing in a market where the rent doesn't get high enough?
Question is, if they are using these fictional valuations to maintain some other sort of financial schemes that helps them pay the monthly. The whole thing will be a pyramid scheme awaiting collapse.