I would do a bank loan with 10% down and 5.5% interest.

This is essentially what banks do.  

It looks like they have failed to make payments since April (we have been paying rent on time, auto-withdrawn from bank account).Ideally:  I'd like to have the loan/trustee waive all fees and interest, potentially lower the asking price ($10,000 discount on a $160,000 outstanding balance of a home that would likely appraise for $185,000) and we'd immediately go through the purchase process as is.Do I need to bring the Trustee into the discussion with the owner at the same time to make this deal go through?

Miller, Haviland Ketter CPA's are the best... and can handle both MO and KS for taxes... professional and won't break the bank . 

I assume the bank needs to pay the amount accrued up until the trustee deed being filed. 

Speaking of good interest rate, it just went up to 4.98% My lender is legit but if I am not wrong, because they're local bank, they do loans only in Maryland but I will share his information with you if you're still interested and I could be wrong.And I truly appreciate your offer to help me and I will happily appreciate your help.

Does anyone have any advice or certain banks?

You would need to purchase a home with a good amount of equity and then do a cash-out refinance whenever the bank allows it (usually 6 months).

@Joshua Rountree - Not sure what you're asking exactly, but I'll try to help based off what I take away from this.First - the offer would likely have to be under your partner's name since a cash offer will require a POF which the names have to match the POF and the offer - otherwise you could just be taking someone else's bank statement and saying they will fund it with no legally binding contract.

My brother is a real estate inspector and recently got a list of foreclosed properties from a few local banks to get ready for market.