A noob's confusion on the elements of a complex (wholesale) deal

[Lem Diaz]

Okay...so I'm on the hunt for my first deal.  Luckily I have a good friend who is a loan agent + real estate agent + an all around smart dude to help me get educated.  I lean on him, but sometimes it feels like he's speaking another language. 

He's walking me through a rather complex deal and I wanted to share it with you folks...I guess more to just share my pain of feeling like such a rookie.

Deal details:

San Jose, CA property he's buying from a wholesaler who is buying from HUD. HUD says buyer can't have a co-signer at a split of 99% (buyer)/1%(wholesaler) for reasons I don't fully understand. Perhaps they don't want wholesalers involved in these purchases. The only way the transaction can go through is to split it 50 (buyer)/50 (wholesaler). This of course leaves my friend (the buyer) in a situation where he's putting up the whole amount for, on paper, 50% rights to the property. So my question to all of you is...how would you structure this deal to protect yourself if you were in my friend's shoes (the buyer)?

I'll share what he did (as best I can) after I get some responses...but I'm curious how others would solve this problem.  Elements that came up were: liens, hard money lending, short term title insurance, recording timing, and escrow.

Thanks in advance for your insights and input.  Sometimes these things feel like putting together a puzzle in my mind.