I would say a modification of option 1, not a mutual fund but syndications. 

If I were them I would keep an eye out to find another property to rent as the home might be sold at any moment necessitating a move.

I would never let him do any modifications to the home. 

But i need this information to be able to make any modifications to the purchase price based on inspection clause.  

Has the owner tried a Loan Modification or other foreclosure prevention measure?

Has anyone taken this guys course?
It is a business opportunity to getting distress owners to modify their loans.
I need a recommendation to buy or forget this guy?

Does anyone have experience with subject to loan modification?

I was trying to find some information on the new Making Homes Affordable program and in particular the Modification portion and found the following in a nut shell: 1) Reduce your PITIA (principal, interest, taxes, insurance and association fees) to 31% of your gross income.

Do I have them sign a new lease with the new rent amount and modification?

I could not rented so I decided to move in and hold it til the value goes up, I got a loan modification because of my condition that helped me a lot. now it has equity and I feel more confident in going to try again in investing.