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Hi Anthony

I have also seen the same clauses in residential loan contracts, though have never heard of it being used. In commercial it is common.

This bank has taken a bath during the GFC on its commercial lending portfolio and is trying to reduce losses going forward or divest its loans to other lenders.

Think of it like a margin call on shares, it is essentially the same thing, either put in more money or be forced to sell, or in this case, as it was owned by a company, receivers and administrators appointed. It only has to dropped by a small percentage to breach the LVR, depends on how it is worded in the loan contract.