Create a 75k Note on 230K house?

[Barry Taylor-Young]

Hello BPers. I got a call from a seller a couple days ago in the following situation......He and his wife bought a house in 2010 worth about 230K. The mother in-law gave them the majority of the money to pay for the house but was 55k short. Somehow, he got into a hard-money loan to pay for the shortage. He even admitted lying about the purpose of the loan......telling them it was for investment/rehab and not primary residence. The balloon is due now and the lender is pursuing foreclosure but has stated that all they want is their money back. I don't think he has tried to refinance because his credit is bad.

Is it possible for me to create a note for anything above 55k and sell it to another investor, keeping the spread as my profit? If so, how do I accomplish this?

Barry