Not a second mortgage but rather a HELOC that would replace the current loan and be the first lien holder. 

There may be a standard form where you fill out the particulars (property owner's name, lien holder's name and amount) and just record it with the land records.

No, the seller should be listed as the mortgagee, a lender's position.If you grant title, you have no insurable interest as an insured, you are a lien holder. 

In 2012 she very reluctantly decided to walk away, understanding the consequences.The first lien holder was a small local Florida bank with only 16 branches - First Federal Bank of Florida.

If it looked like a possibility to foreclose and get the property then i would want an even larger premium because I want the property also.Tax lien holders have little incentive to sell their liens, unless they figured they are a loser.

First lien holder approves the deal but at a max commission of 4.6% and a payout to second lien holder of $3500.  

Should be obvious when you consider any lender or note holder must look at a loan as if they ended up owning the collateral and their concerns with marketability of that property.

I am aware of the due diligence, title search, comps, etc...I also know how some second or third lien holders may be the ones foreclosing on the property.

You must also get the contractor to have their insurance company or agent send you a certificate of insurance naming you as the certificate holder; do not accept a copy of an insurance certificate directly from the contractor.

My "program" advanced payments to the owner/note holder, they payment made then became mine so I was due any late payment or bad check charges.Negotiate it and come to an understanding before you set up management. :)