Homeowner in foreclosure wants loan to cover reinstatement amt

[Greg Lovern]

A homeowner is in foreclosure, with an auction date Friday Feb 8th. I offered to buy the home sub2 for the reinstatement amount, resell, and split the profit, with most of the profit going to him.

I haven't found an escrow agent in the area to handle it because it's sub2 and therefore unconventional, so I've been looking for a real estate lawyer to act as closing agent. But Washington State law makes it difficult to buy a home within 20 days of foreclosure auction date, and I'm being told the seller needs to be represented by a lawyer and they need an extension of the foreclosure date of 30 days.

To make the whole thing simpler, the seller is now asking me to LOAN him the $45,400 reinstatement amount (and lien the property). Is it possible to do it that way while protecting my interests? Here are my concerns:

• If he chooses to keep the house and it goes into foreclosure again later, my lien would be way down the list and I would probably lose the money.
• If he chooses not to pay me the agreed share when he sells, my only recourse is a lawsuit.
• Would my compensation be limited to the maximum effective annual interest rate allowed by WA law? 
• If it makes sense to do it as a loan, why is he asking me; wouldn't it make more sense for him to ask a lender.

What are your thoughts or suggestions?