Owner occupant loan and putting seller's property into a trust

[Robert L.]

What do you all think of this technique?

An experienced investor tipped me off on a killer technique he used to buy a property and wanted to get feedback on this.

"He just did a personal loan to a person to catch her up on her taxes. Since he can’t do an owner occupied mortgage due to Frank Dodd, he put the house in a trust with him as the trustee. She is the primary beneficiary and has the option, but not obligation, to pay him back at 15% interest. If she pays him back then he is removed as trustee and has no further beneficial interest. If she doesn’t pay him back then he becomes the sole beneficiary.

The owner gets to keep their house out of tax deed sale, and if they pay him back he makes 15% annually, or him or his kids will get a house some day really cheap. "