Easy Pre-Foreclosure - what would you do?

OK, I will have to admit I have not spent much time on this site or reviewed much of the old postings but I have an opportunity and a timeline (what else is new…).

I have a friend who has referred an old neighbor to me because she is in a bind. I assumed she needed financing but situation is she goes to foreclosure auction in 6 weeks. She has been approached by someone offering a lease/option vehicle of some sort and is fired up to sign it today. Specifics are such: appraised value is $210,000 with no deferred maint (house is good condition) owes $165,000 total. She is being offered $15,000 in cash, $1600/mo for payments 24 months to exercise the option at a price of $230,000. Realistically she wants the $15,000 - of couse she is sure that she will be back on her feet and able to buy at $230,000 within the 2 years so everything else to her is secondary to the $15,000.

My question is I know I can do something better for this gal and she would rather go with me but I don’t have any idea how to structure this!!! This is not my area of expertise but I would be fine with doing something where she can have $20,000 and buy the house for $220,000 in 24 months with payments of $1250. How would you do this deal with respect to: Ease of setting up, safety to me, etc. I assumed I would purchase with bank financing as I can get it done in 2 weeks and allow her to rent with a verbal agreement for ability to purchase within 24 months at $220,000. Help?

OK, so I have read thru more of the forum posts and general concensus on this type of deal seems to be that no one wants to do allow a seller to lease back or stay in the house. Understood. Most of the reasoning seems to be “if they couldn’t pay prior - why now?” What if the situation was medical and now rectified? What if this was a true first time medical induced financial collapse and the people will be able to make payment?

could you avoid issues if you simply purchased the house thru a bank loan and rented to the individuals? I’m sure the answers (if I get any) will be that I should steer clear but I want to make sure why. If these people want to keep the house but know that they can’t because of the pending foreclosure and would be willing to sell for say $180 on a $165 balance to pocket $15,000 leaving $30,000 on the table. If they simply rented back and would look at some type of lease option at 12 months say… Just looking for solutions if there are any.

Mnay people are renting back to the previous owner and getting them financed in 12-24 months but there are so many sticky points to this. People have been sued down the road for predatory lending issues stating that the investor stole the homeowners equity. You are better to buy the house and either help her ffind another residence, either one you own or maybe from another investor in your area. Just my opinion. Happened to someone I know 4 years after they sold the house back to them.Lawyers are know looking for this kind of thing, especially after investors that have large portfolios.

Fair enough, I appreciate the reply.