I had to borrow the down payment form my parents because I was BROKE. 

Equity pay down is ~$200/month for each $100k borrowed depending on rate you get.  

If the borrower already was foreclosed on, how are they still in the property and available to do the deal?

There are a couple of things that come to mind, if a payment is missed the lender cares, if the servicer goes out of business or misses a substitution of trustee, the lender cares, if the borrower goes to the lender to try to get removed from the loan (usually to buy another house) the lender cares, if the property gets caught up in a bankruptcy or divorce, the court cares and that means the lender gets involved.

but I borrowed money to use as a downpayment. 

But other times, it could be a good way to start a conversation with borrowers that really don't have a clue what is a "decent" rate on a DSCR loan.

No co-owners/borrowers.

Ok yeah we are thinking of getting an investment property loan so we can stay in our current home.If we did the FHA route we are considering on living in the new property for 1 year and then moving back into our old one after the year is up.We are curious if we would get a more favorable rate if we borrowed from our home equity to buy the investment property.Do you have any idea if many investors borrow from their home equity to get started?  

Some of our borrowers are focusing on 4 bed 2 bath section 8 to push those numbers even higher.I pay close attention to 4-bedroom homes in Memphis for S-8 clients 

I've borrowed this strategy from my clients.