Deed in lieu of foreclosure

[Matt Good]

Hello!

I'm just trying to understand this...

I've heard a couple of stories regarding an investor loaning a dear friend cash to buy a distressed property including rehab funds. The investors friend; the borrower, cash in hand then dealt a deed in lieu of foreclosure through an attorney with the seller. The borrower was not only able to pay his friend the investor back right away, but take out a HELOC as the deal was not public therefore the lender saw him as having full equity.

I'm missing some important pieces to the puzzle so please help me out!