If it isn't a secondary market product, as mentioned, there is no upside for the lender and they won't release anyone until the loan is paid off.That said, it wouldn't be impossible for a lender to agree up front in creating a loan that they would take a co-signer for a stated period of time or when the collateral value increases or the LTV reaches a certain point, this is done primarily in commercial aspects.

Are you take $1000 and go to another big bank like Wells FargoTry to do this in the same day or the same week and take $1000 and give it to the bank manager at Wells Fargo and say the same thing that you're trying to rebuild your credit history and you like to pledge this thousand dollars as a CD collateral and get $1000 signature loanSo Wells Fargo gives you $1000 back and your job is to make to bank loans as fast as possible pay them backTo get optimum use out of these bank loans I would make double payments for six months having both loans paid off within six monthsThis one tactic of bank round robin will increase your FICO score generally between 70 to 100  points

The only security you can offer a HML is the AOM and/or a security in another asset that you own which has equity, essentially cross-collateralizing your debt with him/her.

If they have  a personal guarantee from you and you are not insolvent then I do not see that happening.They know you have assets and income and will go after you rather than taking a loss.The 20k is usually a promissory note where the bank agrees to release the collateral for XX and then you keep paying the difference.The bank might require you to secure the promissory note with one of your other properties that has equity to attach to until it is paid off.If you are paying 20k it will still cost you money but you will not own the property anymore or deal with tenants in a crummy area etc.No legal advice given.  

They will have to show the bank there is enough collateral with the remaining properties to cover the debt.

They seemed pretty open to creative ideas, including cross-collateralization to allow me to purchase my next property with relatively little out of pocket.Have you considered a blanket loan to wrap all your properties under one loan?

Was there collateral?

The lender certainly loses out by lending with less collateral than they had intended. 

Maybe the prop. that is free and clear could be used as additional collateral on the new loan.

BTW, doesn't mean the borrower has to be living in the property, it's the loan type and collateral. :)