Are there any potential risks or downsides I should keep in mind before proceeding?

I have a HELOC, so when I want money out of my house I just take it out.Anyway, sorry if I hurt your feelings or anything, but it's a bit annoying to try to help people and have them bash you and refuse to listen, so I get a little carried away sometimes.

@Pixel Rogue The cash out proceeds should be for business purposes such as investing in another RE project. 

A 50/50 split, while not uncommon in the world of flipping, is very sponsor friendly, relative to the typical syndication which will typically start at 80/20 or 70/30 splits, with a vast majority of proceeds going to the LPs, along with a preferred return that gives them 100% of the cash flow up to a certain annualized return metric.  

They may easily discover the clubs, investors/end buyers themselves and just sell their property to a highest bidder without sharing proceeds with a wholesaler.

The Board therefore believes it prudent to proceed cautiously at this time.

I'm going through this with Pennymac ATM but will proceed with the utmost caution as even a perception of fraud would deter me.

I generally try not to sell my properties unless I have to sell in order to have enough proceeds to purchase a bigger and better property (and usually more units).

I believe if something happens and the tenant only has it in their name I am unable to get the proceeds because the check will be written to them. 

She wants to put proceeds into a strategy that is not real estate, which obv presents challenges for tax mitigation.