While researching the court documents and title/deed history, I discovered that both the HOA and the lender separately foreclosed on the original owner and EACH were issued Certificates of Title after adjudication and public auction were done.It appears the HOA and lender fought back and forth for a while but then signed an agreement whereby the lender would pay the HOA a designated amount for past-due assessments and in turn the HOA would release its title claim via quitclaim deed or whatever instrument the lender wanted. 

I'd make sure permitted by "everybody", bank and local law unless we can find a definition elsewhere in the law/reg that narrows the meaning of that word), then you are probably safe from DoS issues with Fannie Mae/Freddie Mac.Here's the relevant language from Jayson's link:"a limited liability company (LLC), provided thatthe mortgage loan was purchased or securitized by Fannie Mae on or after June 1, 2016, andthe LLC is controlled by the original borrower or the original borrower owns a majority interest in the LLC, and if the transfer results in a permitted change of occupancy type to an investment property, such change does not violate the security instrument (for example, the 12 month occupancy requirement for a principal residence).The "if" is important, as is the answer to the question "what is a permitted change"?

Wheatie---If you look at a standard Deed of Trust on a normal FNMA security instrument, it calls for trustees fees in the amount of 5% of the loan amount should a foreclosure be required.

Interest-only loans generally have terms shorter than 30-year standard fixed-rate mortgages so the choice of debt instrument depends on the anticipated duration of the investment held.Hope this helps...

Use a Trust instrument as a fictitious pass through to avoid the due on sale clause? 

The restriction is that the debt-instrument must be non-recourse. 

People are doing this because they aren't trying to cash flow at 80% LTV with a 15-year fixed rate debt instrument.  

LOL, so you bought Christmas gifts early, that may be your best use for them.I do know of this old book, there is some good psychology contained in that one......but,It reminds me of the musical, The Music Man, where the guy was a "pitchman" salesman posing as a music teacher selling band instruments to kids.

But person who is taking loan must have some other "insurance instrument".

To make the situation even better, my attorney recommended including self-serving language in the security instrument to the effect of, "This loan is made without the expectation of any return to the lender other than what is laid out specifically in this instrument," or something like that.