The courts have become much more debtor friendly.

Seller will continue to complete rehab and take on project as their own now.What type of paperwork would I need to engage this first position mortgage - debtors will be an LLC and personal guarantees of two people.

If your name is on it together with his, you could Quit Claim deed it to him after you had your money, so he is sure no debtors could come after him for your interest.

Some of those larger properties like that you really have to time the exit properly because if the debt or buyer cycle doesn't match up you could be in trouble.

If you are making they payments you would be the maker, debtor, mortgagor, or borrower. 

Just because you're taking a different path out of your debtor's prison doesn't mean you're not in debtor's prison.

More debt or equity?

@Corey MooreIs your investor investing in debt or equity of your deals?

That said, if its a true foreclosure auction, they aren't "listing" the property for sale, they are auctioning the property with a bid that meets their criteria, typically total debt or, a percentage of total debt (ie; 90% of total debt) to entice 3rd party bidders so they don't have to take it back into REO.

For example, I think we are late cycle, so I lean toward the safest part of capital stack which is debt (or debt free equity).