That isn’t at all what the person you’re replying to wrote. the key to what they wrote is the loans were highly vulnerable to interest rate swings as there were no principal repayments.
The bank didn’t bust due to HNW people going bust.
That's still not right though. They didn't hit trouble because the market had a downturn. They hit trouble because when the loans were highly sensitive to rate rises.
If you have $1,000,000 in principle, at 3% you pay $2500 per month. At 9% you pay $7500 per month. Even if the house is still worth a million you can't necessarily afford the payments.
The bank didn’t bust due to HNW people going bust.