I'm not going to vouch for the reliability of any of this, but he seemed a sensible sort. According to him the banks don't want people to hand their keys because it costs them a fortune to sort out the paperwork.

Legally, if there's any charge on a property - which there is in the case of slicing and dicing - the bank does not own it. At best it owns a share in it.

And it's actually possible for a bank to be in the equivalent of negative equity. If a foreclosed property sells for much less than the loan book mortgage cost, the bank is still on the hook for  for the difference in somewhat the same way that the original buyer was.

So if the original buyer moves out of the country and can't be chased for the debt, the bank is left holding - something - of indeterminate value and ownership, which it can't necessarily sell.

He also said he knew of at least one case where someone handed their keys in, and a few rounds of financial pinball later a holding company contacted the owner and said he could have the keys back for a nominal sum.

Effectively the holding company either needed a quick cash sum or didn't think it was worth trying to sell in a dead market - or possibly it was hoping that the former owner wasn't going to ask any hard questions, and his house is still co-owned by most of the financial industry.