Lease Options & Underwater property

[Jose Enage]

I need inputs of our "lease option specialists" in BP for a deal I am putting forward.
My understanding is you can do this even if the property is underwater. Please advice if it is viable.

There is a balance of $120k on the mortgage. It is a 2/2.5 bath townhouse. Monthly payments are at $900 (mortgage, PITI, insurance, HOA, tax). Rental comps are $675-985. It was vacated last month and rental was at $900. Property recent sale comps are at $50K (last 6 months). Seller is very motivated as he was denied a remodification of the loan by his bank as it is his second home. He is an out of state owner. Short sale is not an option for him as his primary motive is to protect his credit - which he needs for other purposes. He is very open to the idea of lease option.

Is this viable for a sandwich lease or is it better to wholesale this L/O? Any ideas on how to set this up if at all viable?