Banks generally have a hardship committee or hardship policy, which he should fall under.
All in all I wouldn't be worried about the bank too much. There are people in houses worth a lot more for a number of years and the banks are barely into the legal route.
Really the most important thing is has your relative engaged with the lender? Have they outlined all aspects of their circumstances? Make sure he is not putting his head in the sand.
The threatening letter was probably at least partly automated and the banks have an awful lot of a backlog to get through before they start shaking down an old and sick man with a small debt. Of course, it may help to know which lender we are dealing with here.