> Of course someone would figure out a scheme to get individuals to overprovision their mortgages and then back-assemble the excess debt with kickbacks to route it to other uses.

Legally mandated LtV < 1 based on `min(sale, appraisal)` would pretty much hinder such schemes. You can always sell your house to your child/parent and get equity back into the family anyway, but in general this would mean mortgage (real estate leveraged financing) could only be used to finance the sale.