I think we need more of the back story of the players involved in order to determine if it’s a deed, an assignment, a mortgage, an assignment of land contract etc that needs to be recordeddid not have an attorney or collateral company review the documents prior to acquiring?

Much fewer lender would do it compared to first lien.Or you can also look at raising money by allowing for a short term loan against other collateral if you had a rental house

You can also do this if the HML cross-collateralizes the equity you have in another property to replace your down payment.

It also depends on the type of collateral you are purchasing. 

For me, only the first 2 reasons are valid, and I'd prefer in the latter case to use that smaller property as cross-collateral for another deal.

I don't believe there is any written rule that restricts a bank from financing their own properties, but it's more of a stigma, the property was taken as collateral on a deal that failed and now they agree to do it again, it's just a poor lending practice.

Lenders like to have collateral close to them, banks have lending areas, Peru is a tad outside the customary 30 mile limit for residential properties.

Notes are not really "RE" it's finance, only relationship is with the collateral, so you must be familiar with RE first before you can move to mortgage financing.

Let's say too, that I write it up that if any part of the deal is found to be in violation, the security agreement shall become invalid, released and set off automatically to some other collateral which makes Dodd-Frank irrelevant (just thinking out loud here) how can that be any harm or foul?

Last night I hosted a meeting featuring an attorney who does private lending, and last year I hosted a former attorney who does HML, and both of them basically said that for them to be safe they would not do the loan on a sheriff sale purchase until after the deed was recorded - so that the new owner actually had something that could be pledged as collateral; buyer uses all cash and refinances after they have the deed.