Yes, but they'll need to show a reason for "imminent default" due to some event beyond their control.  

Another deed, from the buyer back to the seller, was also signed by the buyer and held with the attorney in case of any default...

This will give the bank all they need to have the rents paid to them in the event you default on an obligation.  

In the case that I default on my payments as we set up in our agreement, he would have the opportunity to foreclose on me and re-obtain the property.- I would also obtain a loan for rehab (ballparking 50k but have not walked through with a contractor), which has not even entered the picture yet.- I expect the home to rent for 1400-1500This is where I am at the moment and am trying to get a meeting with the seller and his agent.Thoughts?

If the payment is low enough you can make money on rent while you wait for appreciation to work it's magic.After the owners have been in default several months, it's usually hard to do Sub2 deals because the amount of money (late fees, attorney fees, and deficiencies) you need to bring them current is more than you want to risk on an upside-down property.

The lender will plan on if the property goes dark after the primary term or the tenant defaults early then you will be releasing to a second or third generational tenant at below market or at market per sq ft rates.

I have 14+ years in the mortgage area with an emphasis in default so I would not need hand holding. 

If it gets to a trial, you'll have to have a "witness" from the Servicer, testifying about how the records have been kept by industry standard practices, pay,net histories, default letters,, etc, etc.  

If the applicant defaults, I keep the fee due to my lost ability to rent the place during the time I've held it for them. 

Their buyers, who obtained FHA-backed loans, often couldn't afford the payments and defaulted.