If there's any server based processing then that probably opens a huge can of worms in terms of privacy that I doubt many devs want to deal with.
If it's done entirely on console then that limits the accuracy of the result. If the game isn't using any fancy machine learning algorithms (that stuff is really new btw, barely any games even use basic style transfer stuff) then the options are to pretty much do what they did in the PS2 era and project a photo onto a pre-made 3D mesh, that happens to have a much higher visual fidelity thereby making the whole thing look far more creepier, or do an actual 3D scan of someone's face, which is... difficult to do on a console. At that point you're talking about building a companion app to the game using the iOS Face ID API or something since that's the only quick way I can think of to build a depth map of someone's face. Once you have that data you then need to build an algorithm to process it, including displacing the polygons of the face, reconstructing the standard PBR texture set from that photo (which of course has to be done automatically, you're not going to have your players use some Substance B2M equivalent to do it manually, right?) and finally get a result that absolutely falls apart the moment the camera comes in close to the character, so the best result would be for a game like Bloodborne where the camera is far enough away for the seams to disappear, in which case this whole endeavour has been pointless.
In end, we're talking about a substantial amount of work for a feature that, let's be honest here, not many people care about. For the games that actually have a feature like this, how many players actually take advantage of it? I can't imagine it's a whole lot.
Really, I imagine most people don't actually want to see their actual faces in games, when they can build an idealised version of themselves in the standard character creator. The idea of my player character in Skyrim actually being me, and not some vague facsimile of me, is a bit weird to think about. Would make for some fun clips on YouTube no doubt though.