Not only can they lend with fractional lending, they are backstopped when they fail. ;-) 

If I read correctly I was directly responsible for your grandmothers friends failed health and she is fearful of her life?

Failed listings could mean canceled listings, expired listings, or where there have been no updates to a listing for X period of time and they just move them to failed.Equity could be calculated based on FMV - original mortgage OR FMV - estimated current mortgage amount. 

If they fail to respond or pay, you could then consider hiring a collection agency to recover the debt.

If the successful bidder fails to remit legal tender, he or she is then liable fore $500.00 per property, which is collectible by the Tax Collector.

I think my response failed to consider that you were also looking to live there.

If you fail to follow the rules, you may open your personal assets to a lawsuit.

I have used property managers in the past, but the relationship inevitably sours as they fail the very basic industry standards for managing property.

The problem is most loan officers will not know this up front because they fail to do a "pre-underwrite" and get a "Loan commitment" versus a pre-approval letter.regardless of you using your own money they will "Not" use the higher appraisal value they must go off of the legal sales contract.

Moreover, if the tenant fails to vacate after the notice requirement you will need to file a complaint in Superior Court in order to evict them.