My attorney says he would prefer to structure it as a contract for deed but the buyers contract is written to give full ownership to the buyer immediately and I would be the mortgage holder.

If you acquire a property in a trustees sale and the trustee is selling the property to satisfy the first lien holder’s indebtedness, then this forecloses off the second lien holders mortgage.

I set up the trust deed and promissory note so that in case of default on Lot A, I would be the first lien holder on Lot B and it would be held as collateral for the loan balance of Lot A.

Also, some situations will Require the buyer to come in with some additional cash, above and separate from the purchase price, to settle with junior lien holders who won’t accept the 1st mtg holder’s offer to them, HOA’s being a prime example of this.The Last thing the owner needs is have their property tied up up with an offer that has no chance of be approved for a couple of months, when another buyer willing to pay the appropriate price may be out there.  

So your QI forms a holding entity called the exchange accommodating title holder (EAT) and takes title in that entity and holds it for you until your old property sells.   

Only once qualified for the new mortgage would the title company reach out to the existing mortgage holder for a payoff.

Yes and yes... and results with individual lien holders will depend largely on lien priority and equity.

Certainly not the lien holder....

Assuming this is Florida, I strongly encourage you to read your local state property tax lien laws because there is some good news that might apply in your situation.What effect does a tax deed auction have on the primary mortgage lien holder’s interest in the Subject Property following a tax lien auction?

Then talk to the note holder and let them know you are going to refinance and (though there is no prepayment specified so you believe you do not owe one) you are willing to pay a token amount so there is no argument about it.