Banks aren't always pragmatic. If after the foreclosure a particular property is a 400k loss than it doesn't matter that the property isn't worth that much, they still want their money.
There is also the possibility that those loans were all bundled together as a AAA rated securities and sold as shares of an investment. In that case there is no way to even renegotiate the terms of the loan because not only are you part of a larger package but a larger package that was then subdivided and sold. You have no one to barter with.
Now, that second example is leading to some crazy shit happening. There have been a number of cases throughout the country of judges siding against lenders because they routinely fail to be able to legally establish ownership of the loans due to how many times those loans have changed hands. Example -
New York - Fighting Foreclosure: Subprime Borrowers Battle (and Beat) Lenders in Court - Runnin' Scared - Village Voice