I agree I would figure out what was the very best  reinstatement for me (re not foreclosure) and present that as an option to circumvent foreclosure.

If you expect a two-for-one deal you're merely asking to get screwed." -- Dean Engle, Park Tree Investments, in the Sept. 2017 Paper Source Journal

I merely just pointed that out because I saw a rather large transaction, involving over a hundred million dollars done. 

We are not going out of business we are merely restructuring going back to our old way of doing things that made us successful.

I certainly will never call myself a guru but merely a practitioner and really do love Real Estate Investing.

They collect $39,000 in payments and a $15,000 balloon and we service for them for a mere 3% of the P&I payment.

One issue you bring up is the mere fact there could be TWO closings.  

If you merely put up a good show, on the other hand, such as listing it for rent at an amount that is significantly higher than market, or not even listing it at all, the IRS will see right through that.Other common sense evidence of intent can be gleaned from a review of the case law (i.e., other people’s mistakes):Don’t have plans drawn up for your principal residence or a vacation home just before or after the exchange.Don’t move into the house right after the exchange, even on a temporary basis.Don’t make the contract to acquire the replacement property contingent upon the sale of your principal residence.Use a reasonable and significant amount of advertising or listings in order to rent the property at a marketable rental amount.Document how you arrived at the asking price of the rent.Don’t start construction on preparing the house for your personal use right after acquiring it.Make sure that the restrictive covenants of the replacement property (or condo documents) allow it to be rented out.Document your efforts to rent the house out including names and contact information for potential tenants who looked at it.

Our local rental cap rate is a mere 2.5-3% not factoring all expenses like insurance assuming no vacancy.

That seems wildly inappropriate and not within the authority of merely being under contract to buy a property.