With a HELOC, if they default, they lose the house... with this, they'd lose the note.I'm just not sure where one goes to get that kind of financing.  

These investors will become non-investors in short order because they are always a vacancy away from default. 2.

The contract should state who is allowed to do what to whom when a party defaults.  

Because I cannot (easily) come up with the necessary down-payment I am considering various seller-financing offers as follows: The owner has listed the property for 365k. 1) 275k over 10 years at 5.0%: 10.5k down; total interest=73k; total cash to buyer=353k;2) 325k over 15 years at 4.0%: 10.5k down; total interest=104k; cash to buyer after interest=429k;3) 350k over 20 years at 3.0%: 10.5k down; total interest=112k; cash to buyer after interest=462k;This is a naive offer by default because it's my first seller-financed offer.

If in default, you would likely have an option to buy-out his position if you have the cash.

It's something I developed over time by default. 

The prevailing risk here is more likely prepayment than it is default or delinquent payment.  

Saying that defaults based on leverage used in fracking will be a trigger that causes a collapse the economy is far fetched.

If not in default you can go a while w/o making payments if that is in your comfort level.Some people don't realize HELOC's and HOA's can actually take their home away and just ignore those debts and continue paying on the first, only to lose it in foreclosure to a second.The owners are quite shocked when someone walks up to the door and asks them when they are moving.

If the seller is allowed by contract to terminate without default on the part of a buyer (and I understand this "may" not be the case), I would seriously consider using another contract form that has more teeth.  3.