Contact a real estate attorney and let him put the paperwork together. 2.

the house has a bunch of equity, being worth about 750k when fixed up.I  know that on a standard convenetional mortagage foreclosure, there usually additional fees such as unpaid interest, attorney fees etc, apart of the princiapl balance.Is there a way to conservatively assess what will be the actuall "Pay-off" on the 1st?

Sometimes a direct conversation can clarify things.Consider Legal Action: Since the note is in default and you’re well into the second year, you may want to consult with a real estate attorney.

It's better than what you'll get from most attorneys and what you'll find on the internet.

@Chris SeveneyWe put tenants into collections without a judgement or involving an attorney.

In most cases, neither is warranted.Warning: I am not an attorney, and this can be a complicated topic.

I know I will need to hire an attorney. 

While you may be trying to do the right thing, if you buy the house from them below market and they find out later on chances of you getting sued by a pro bono attorney is very high.

Question is will I need to hire an attorney to handle any and all paperwork for this?

Speaking with one of our attorneys she mentioned the largest area of defaults she has seen is in SS space as it got over saturated in some markets and rent appreciation has not been as advertised.