If that's the case, and going into a judicial foreclosure, I can certainly see the borrower's attorney raising the issue as to redemptive rights and I'd say any judge would like grant the request, IMO.Your last paragraph isn't real clear, if they are using prearranged deed agreements, I don't care how big they are, not a good idea, in fact the bigger you are the more you'd better conform or accept the liability consequences.I'd prefer setting up a sister entity that would buy the property and then lease back, after a period to qualify, some inter office bookkeeping could take care of the financing, just make a new loan.

Today is the last day for acceptance and she is confident we will have it signed and ready to go.The home is split into 3 parts, 2/1 main section, 1/1 m-in-l suite which is rented at $650 all inclusive, and a 1/1-no kitchen converted garage (landlord used when he visited) that is non-conforming because the landlord never got a permit, but he will try to get a retroactive permit and pay the penalties, or remove the changes...He is also a Canadian and we will have to deal with that tax issue where they hold 10% of the sale or something, no worries there...Great house, great neighborhood, great price, I'm gonna be happy if it all goes through.The other house where my agent wouldn't work with me because we wouldn't give him 2 proofs of ID and a utility bill was foreclosed, and I see that many foreclosed houses do actually sell close to ask price.

"Conventional loans", that is, loans that conform to Fannie Mae and Freddie Mac's rules, are limited to four units or less. 

If it was done prior to 1990 it would generally be called legal non conforming.

If the apartment would be conforming in those areas, you could at least justify a higher proposed rent because of the legal extra space, even if it was being rented as a single house.

@Brandon Oldham guessing you're mixing up FNMA (conforming) lending and nonconforming.Try Kristopher Natschke Mortgage1 Infinity Branch as he can handle both.

It conforms to whatever is on the bed at that time, so it conforms to YOUR body when you are laying there, pops back into (flat) shape.

Hi Urvil,I am familiar with the area, and the area your home is in does have many multifamily homes; the majority of them are legal, non-conforming multi-unit apartments. 

I have not checked conventional investment rates recently, but for a conforming loan, they tend to be 30 year fixed primary +1 at least, which is around 6.3%, which would make your rate 7.3%+.

I'm wondering how income from a seller-financed property would be treated for conforming mortgage qualification for a new property purchase?