@Lourdes Caballero  I agree with you wholeheartedly that negativity does no one any good. 

If you stayed with your parents for $0, then you have say, negative cash flow of $1,750. 

Saying it wasn't in the lease or @Kevin Sobilo saying it just comes down to one person's word against another would negate virtually every crime.   

- Tap your equity without refinancing - YES- Pay down principal and save 8% interest - YES- Lower interest than "hard money" loans - YES- Interest-only payment if needed -YESThe negative is paying high interest from the combination of high principal and high interest %.  

My preliminary research on Zak has not shown much negative things yet.

Also, focus on 2 years of job/income stability.Class D Properties:Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciationVacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions.

My underwriting would have this large negative cash flow for 7 years.I would do a thorough underwriting but want to show using quick math the issue so I will use the 50% rule.  

In the example you outlined and in the case of what a lot of people are doing right now (super high LTV underlying, negative equity on wrap, 100% financing for the buyer, low note rate, etc), then no, this wont work, primarily because whomever created the wrap note is either an idiot or a fraud.  

But I also didn’t have all the negative Nancys (sorry Nancys of the world) saying it was too risky too late or couldn’t be done.

As a community I think we should focus on helping people who have had their housing situation negatively impacted recover as quickly as possible.