You will be in violation with the state, county, city, and federal including the IRS.

His social security and retirement funds are also off limits under Federal law.

@Michael Anspach, if he does that there's some related party issues as well as the federal interpretation that he is selling to himself since really it is their joint tax return that is the owner for federal purposes. 

Given that their top marginal tax bracket is about 45.4% for Federal and State income taxes, they get about $1460/month in tax refunds from the deductions.

I looked up the deeds to the property and there was a Notice of Default given out May 2012 and then a Trustee Deed signed October 2012 by a FEDERAL HOME LOAN MORTGAGE CORP as the Grantee.

@Julia ParslowYou are correct that the contingent deferred sales charge may not apply if you have had the annuity for a certain number of years; however both federal, and depending on your state of residence, state taxes will apply if you take a distribution. 

Very familiar with one, my husband calls it camp and the mere mention of me renting it sends him off on a tangent.....original full log cabin on 10 acres next to federal forest, generator, 10 acres....it would rent in a heartbeat...but then I would be a widow.

talk to @Upen Patel I don't think The Federal Loan Savings Bank requires two years to count rental income.

Or would my bid go to the bank holding the mortgage, and the property/federal tax liens get placed on the house to pay after the sheriff sale?

Federal Capital gains tax is 20%.