Ask the law firm what the penalties are and how much they accrue each month.My guess is mother became sick and went into a nursing home and the home got her accepted by Medicare which then required her to list her assets, and Medicare then put a lien on the house.

I was not sure how that accruing interest owed worked, whether the interest rate applies to only the initial loan amount, or is reassessed each month or year as more and more is owed to the lender.

At the end of the term (12 months), the $50,000 of principal (and any accrued interest) would be due.

I have heard Santander Bank will send a check to the tenant for any accrued interest at the end of the year, which may be helpful depending on your state laws.

By your own evidence the interest continues to accrue at simple interest.

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I bought my primary residence property for roughly $100K when I was 23 using an FHA load that I got through lendingtree.com (yikes) and over the past 4 years I have paid weekly installments on my mortgage in order to accrue equity faster before I even thought about investing in real estate.

In which if not paid by the end of the month can accrue late fees.

During the interest-only period, only interest accrued each period must be paid, and a borrower is not required to pay down any principal owed.

If it takes you longer than expected to rehab and sell the property, you can easily lose money simply because of the interest that accrues.