Essentially, from the buyers prospective, this is a “penalty” paid for either having poor credit (bankruptcy, 90 day lates, overburdened with debt) or lacking income.  

If I am understanding the situation, you took at a 12 month loan and it is now due and the lender is foreclosing (I do not understand the six month comment).Here is the reality, getting a lawyer and spending $ to delay a foreclosure is only going to cost you more $ as the lender will also have legal costs that get added to the loan and you will have legal costs.Your options are refinance or file bankruptcy.

It covers you for boundary line disputes, it verifies the person who is selling you the property is actually the owner (that out of state seller you are dealing with may not be the seller and presented fraudulent documents), title does a name search to verify the parties do not have liens against them personally, lawsuits, bankruptcy, probate, or something else that could prevent the buyer from having full ownership of the property.

Bankruptcy Court for the Western District of Washington.10 years in, Mastro bankruptcy case may finally be in 'home stretch'The largest personal bankruptcy in state history drags onOn the trail of Michael Mastro: how to flee the law when you are 87Following that first night spent in the police station, the Mastros were transported 90 miles to a prison in Lyon France Mastros made American Greed episode !

However, the resort business did not fail and we did not put it in bankruptcy. 

Even Robert Allen, the Nothing Down for the 90's guy ended up filing bankruptcy.

Chris: What does happen if they file bankruptcy ? 

Your other assets are mostly in creditor protected entities, such as retirement accounts, personal residential homestead; and what’s not is heavily mortgaged, or exempt by Federal bankruptcy law.

. , the bankruptcy after  cross collateralization ; ponzi scheme lawsuit is the new normal these days.

Would my FTC Bankruptcy claim work as an LOI?