However, he bought in the 90s, in a nice part of Jamaica Plain, so the high rent, no crime, no mortgage payment combination will surely be impossible for me.I have been looking into 3plexes in Dorchester.

Simple because in a court of law the contract holds no weight due to it being an illegal service to begin with.So the scorched earth response Jim K said he would do it not only impossible in this situation, but also illegal if he actually succeeded in get an 'eviction' on her record.

In today's current lending environment, no matter where the asset is, a line of credit on an investment property, through a conventional lender, is almost near impossible to obtain. 

Is the FHA route near impossible?

Given that this is in CA, that is almost impossible to know.

Interesting - the market in Huntsville right now has not slowed down at all;  in fact, I would argue it is even crazier than it was 3 months ago, and is now virtually impossible to find a property to cash flow unless you go to C/D neighborhoods or go in areas that typically have zero appreciation (outside of Huntsville and Madison city limits).    

I'm having an irrational fear that there is some impossible to understand IRS language that would allow the IRS to redeem the house with no payment since the current owner would be different from the original purchaser at auction.  

It's also almost impossible to verify if they are in fact telling the truth.

I know this is impossible to answer with a blanket number, but is there a rule of thumb or conservative figure that most end up seeing?

Pooh looked at the positives of the moment - "People say nothing is impossible, but I do it every day".I'm a Pooh.