Wow. Not a lawyer, but I can tell you that clause and their explanation are BS. The whole mortgage system doesn’t work if a bank can repo a house irrespective of payment on the loan. And the inheritance thing is long solved: any heir would inherit the property with the (legit) mortgage repo rights attached to it, so they wouldn’t be able to escape the loan repayment obligation either.

Fortunately, I doubt a judge would uphold that provision and find that you were forced into it for exactly the reason you gave.