I see...so really this would help someone who was either cash or credit deficient to get the 100k loan himself, right?

The makers/payors shall not be personally liable for any deficiency resulting from any sale and/or foreclosure hereunder.

There is a dash of incentive to hold the seconds for potential deficiency and surplus claims as well.The reemergence of second lien desirability has come by mainly the street level investor.  

The problem with doing a short sale (or waiting until foreclosure) after a BK is that they may still be liable for a deficiency judgement, but I'm not certain on this.  

In fact, most do not.This article went after short sale investors and was based on inaccurate, opinionated, and even fabrictaed information.As a short sale investor who does it right, I don't "convince the lender that the price I offer is the market value", what I do is pull "real comps" and deliver to the BPO agent and point out any deficiencies with the subject property.

Saying that if you get the property back and sell it with seller financing you may avoid the tax issues of the gain, but that is to your discount and there are no deficiency judgments with equity based loans as they are viewed as installment sales, not cash advances.....but since notes are usually purchased at a discount it's unlikely you'd have a deficiency, unless you had an uninsured loss.

That might include getting a deficiency judgement and working the collection from that angle.  

FL with city liens is that the buyer buys the property, corrects the deficiency, then negotiates and pays perhaps 10 cents on the dollar.

He could be in title and not one the note, but that's not the usual case.You also need to ensure there will be no deficiency.

If the borrow doesn't "cure the deficiency" or sell the property, the property goes to a trustee sale and is sold to the highest bidder.