The substitute of collateral was more of a scenario where you sold for $155K, and instead of paying off the $88K loan in your scenario, those funds stayed at the title company and were used on a cash purchase happening nearby in date. 

If you lie on a loan, it can be mortgage fraud. 

Instead of a traditional down payment, I would give them some money (maybe just to bring the loan back to even).The upside if taken over the loan at the current balance, with some rehab and hopefully getting the front lot back would be a nice ROI. 

If he has a $5MM loan in place, what was that used for / is it coming due/ was it short term/ etc.?

By definition, these type of loans are not the same quality as what is traded on wall street. 

@Ashish Acharya I have found that I get better terms for personal loans. 

House hacking is a great starting strategy, especially with FHA loans.

You don’t have to pay $20k+ to learn to broker loans. 

Pretty common, you can definitely use commission as down payment conventional loans and not have it count toward IPC as long as you're on the loan. 

Conventional loan.