The note holder?

If you are a long-term holder, you are placing long-term, fixed-rate debt on the property at a conservative level of leverage (75% or preferably less), and the property is currently cash-flowing with a substantial cushion over the lenders DSCR requirement, the property should be able to withstand whatever is coming in the market.  

@Carolyn Morales  overages from a tax sale go to lien holders of record in order of when they were recorded... so if there is a first mortgage boom they get paid  second mortgage boom they get paid.if there is no debt on the home then homeowner gets ALL the overage starting bid is not necessarily the amount of tax owed. and the owner has to make a claim for it.. check does not just arrive in the mail same with lien holders.

Then the lien holder can apply it to go for tax deed sale.Hope that clear up your confusion.

Make sure there is no pre-payment penalty.In your deed of trust, instead of a customary default for taxes or insurance, make it so that in the event of default the note holder has the right "AND OBLIGATION" to pay amounts due and make amounts expensed as part of the principal amount outstanding...so that if you did miss making an insurance premium payment or tax payment, the note holder can not declare default and call the note due!

Do you run into problems with adding the 2nd mortgage holder as a loss payee on the insurance policy?

In the states with which I am familiar there are no payments to the certificate holder until it is redeemed. 

Codified Laws § 21-49-34, 21-52-14)The Same same applies to banks or any lien holder.....so for SD its 180 days

Any way, for a short term, as long as you got a title search/committment showing only the mtg, not a lot to worry about, unless of course some past heir/title holder pops out of the wood work with the  "my name was forged, yada, yada" and you'll be out in a few months.

The purpose of insurance is to distribute costs across all their policy holders, but they also have to charge for profit and overhead.