The wife has told my friend that she's walking away from this home as its underwater with 2-3 mortgages and several judgements.

Also check the judicial records and check for judgements or lis pendus.

I've heard of landlords winning judgements then selling the judgement off to a debt collector and moving on.

If she has property, cosigns and there is a judgement down the road then you are more likely to collect as you could then lien her property.http://www.nolo.com/legal-encyclopedia/lack-capacity-to-contract-32647.html

Someone bids more than the judgement amount, you are made whole.Not sure if that is what you were looking for.  

It is something you already gave to someone else.It is possible that IF your student loan defaults and the holder of that loan obtains a judgement, that the judgement can be used to lien your property or garnish your wages.  

Are there other liens (other than taxes), code violations, mortgages, judgements, etc?

If he closes shop, he'll be facing judgements in court from these providers, etc.Business owner owns roughly 50% of his home valued at $300kBusiness owner's FICO score disqualifies him for more traditional / sensible financing which is why he opted for short term working capital in the first place.Proposed Solution:Come in and pay off the existing $40,000 owed to short term working capital providers on behalf of the business owners.Take deed to the property under a sub to arrangement.Lease option the property back to the business owner allowing him to stay in his home.Charge a reasonable fee for the $40,000 and lump that in with the monthly mortgage payment and spread the payments over 24 months.Expected Result ROSY Scenario:Business owner will free up cash flow.

Is this is one of those judgement proof tenants where it's not worth going after?  

Against my better judgement I let here Put an offer on the Property which was accepted because her's was the highest and Cash, I made the $5K deposit subject to Accepted Over within 24 hours.