pre foreclosure and sub2

my my questiong is can you sub2 a preforeclosure
example

A seller agreed to sell a free and clear property for $107,000 if I gave him $30,000 upfront. He’d carry $77,000 at 7% interest, or about $700 a month for 15 years.

It needed $20,000 in repairs and would resell for $169,500 with owner financing after it’s fixed up.

I borrowed the $30,000, plus $20,000 in repairs, plus an extra $20,000 for a total of $70,000 from a private lender. My lender got a first lien, and the seller got a second lien. The seller also agreed to subordinate to any new first loan on the property in the future.

The terms of the first were 13% and 5 points with a 3 year balloon. Payments worked out to about $760 a month. The total monthly with the first and second mortgages totaled $1,460. Market rent was $1,395.

I’d have a small negative cash flow, but I’d walk away from the closing with $36,500 in cash which included my rehab money of $20,000 (less a couple thousand for closing costs.) I put the house on the market for:

"$169,500 fixed up--make offer as is.
Owner can finance."

source:http://www.creonline.com/articles/art-214.html

can you do this with pre foreclosures also and this would be in the case that they want money to move and there is equity in the house???

thanks

no one is answering so i will just add i am assuming here that the bank allows you to make back payments and bring current and then do this to allow to be able to sub2 with owner