Posted by John Corey on May 11, 2006 at 04:25:12:
I posted a reply about hard money and private lenders in a later thread that you started. Look there for that info.
The program that you described is shaky at best. A OR lawyer who focuses on RE and is a board member of a large REIA explained how an investor lost a case in court involving a tenant who was the prior owner. The short version is to stay away from any foreclosure situation where you are leasing the property back to the owner who was in default. If you are doing a lease/option the court will view this as a loan and apply the usury test to the loan terms.
BTW - Private lenders do not put up money for small seconds. At least private lenders who understand RE investing do not do so.