How does one take the owner finance situation to a bank and turn it into a 30 year loan to hold without an additional down payment of 20 percent ?

Congrats - do you ever think you'll expand a buy a true standalone STR of just happy with this current situation?

And it most likely will.There are some loan products available for low downpayment if you are willing to do a live and flip situation. 

I don't know about doing a refi, I think it depends on your situation and rates.

Can anyone recommend  a lender in the area who could accommodate this situation?

The downside is you now have a situation where they make more money the longer it takes to get your house rented. 

Different persons, different situations, different benefits. 

My guess is that it would need to be a househack-type situation, as VA loans can only be used for primary residences.

Quote from @Steven Lee: Hi Steve,I'm sorry you're in the situation.

If you did not and it’s unsecured debt you could be out of luck on some or all of the money as depending on his situation unsecured creditors in a bk may receive pennies on the dollar depending on what he can afford and if converted to a ch 7 you would get wiped out.Even in 2nd position he could argue the property is underwater and wipe out your lien.