In fact, when the same lender has loaned for both a first and a second on a property, they will prefer to foreclose on the second (assuming both loans have gone into default if course). 

They never usually show up, so a default judgment is usually granted, and my claims for damages are usually never contested.

The buyer might not be OK with accepting a 2nd mortgage when you already have a primary mortgage secured with the property for 75% of total current value. buyer won't get anything if you defaulted on your note and ultimately the first lender would likely get the property. that's high risk for a buyer unless you paid off the loan in full prior to owner financing.

Also, where could I find information about foreclosure/notice of default properties, probate properties, short sales, REO's, etc?

I have given sellers references of other sellers I have worked with and my personal financial statement to ease the fear of default they have, reducing my down payment.  

I sold many of my OREO to investor that had big negative cash flow but I sold them with ZERO interest and 60 month notes  they paid them off and owned them free and clear in 60 months... its a little tough for those years but the amount of money they save over a long period of time came back to them very quickly once they had them paid off.I have one more that I am going to sell ZERO interest... and I know I have to pay Imputed interest but I like not having to worry about getting paid.. never had a default on a zero interest deal.

The lender wants to protect against a default event on the loan by having extra reserves calculated for if things go wrong.

There are borrowers who will take advantage of a modification, knowing it means vacating default or breach events.  

Might this note be bundled as part of some other default loan package?

Within our service the payments are marked as Paid on Time by default, however you have the option to mark the payment as Late for credit reporting purposes if ever necessary.