Riddle me this: why foreclose if you paid cash?

[Shalom Benton]

Riddle me this:

I recently saw this happen but I can’t figure out what the loophole is....

A trust fund baby purchases home #1 in cash for 50k. Lives in it for a few years. Buys home #2 in cash. Moves into it. A year later, Buys home number #3 (a mansion), and then the bank forecloses on home #1 and lists it for sale.

What is the loophole? Why would a wealthy person, who paid cash for a home, foreclose...? instead of just selling it?

I’m interested to know your wild ideas on what the loophole could be. Personally, I don’t know the answer. But I have my own guesses haha