Would you say no to a free house? People do things against their interest all the time.
You also don’t know that they weren’t required to hold on to the house for a certain amount of time in order to accept the house. I would be surprised if there weren’t such conditions. Maybe you are financially literate enough to turn down a deal like that, they aren’t necessarily.
They’re also only one job loss away from a tax lien against the house they thought they could afford to live in because they got it for free.