This is really not an accurate description of DSCR Loans - these are not really originated by Banks to be held on Banks' balance sheets - they are almost always going to be from Private Lenders and sold into Non-QM Securitizations (securitized into Mortgage Bonds). 

The property I am closing on includes $110,000 in non-real assets, where should those liabilities be held?

The house was in such bad shape I've seen squatter homes in much better condition.He sold the house to a woman who never saw it in person, he told me he out 20k into renovating it which is a clear lie there's only cheap new flooring upstairs and fresh paint upstairs that's it.One of the rooms is being held up by cinderblocks and the houses foundation is ready to cave in at any time. 

The numbers reflect speculation, not an appreciation in the real value of the same asset held over time.

It is his primary source of income (held in an LLC) but is paid off and he's considering selling or pulling money out for a down payment towards a new primary purchase.

The buyer is not held hostage waiting, nor is the seller responsible if the buyer chooses to wait for the closing.

It is important to note that since the due diligence fee is literally a check, wire, etc that goes directly to the seller - and is not held in escrow - the seller can spend it on whatever they want immediately. 

But then again, we are held hostage by providers.

For the held properties, get the performance numbers to date, and also maybe the current occupancy, EO and/or EV.

I’m a hustler and don’t need my hand held like most of these programs seem to offer.