The situation you're describing is a pretty typical junior lien buyout.

The summer going into junior year I realized my biggest expense of college was my living off campus and associated costs.

Then if there is any overage it goes to any junior lienholders and finally to the homeowner.  

In your state you have to add to this list super-senior HOA dues and junior liens that don't get wiped out if the foreclosure suit isn't drafted properly.  

It depends on what you're looking for, whether it's lower rates, longer length of the loan, lower down payment, faster closing, ease of transaction, flexibility of the lender with wholesale fees and junior lienholders (if you're funding with private money), etc.Keep in mind that lenders also change over time, just like contractors. 

Ask the junior residents if they are interested or know anyone who is.

If his name is Junior, EVICT!!!!

One thing we have not done since adding junior liens to the mix is put insurance on them.

What you are wanting to build is an Accessory Dwelling Unit or Junior Dwelling Unit, which hopefully your zoning will allow.

And the lien position is the most important thing after knowing the rules for that type of lien; if you end up bidding on a junior lien position, you then become responsible for paying off all liens that are more senior in position.