If the Feds enforced fundamental and basic reserve and credit requirements the build up of suspiciously collateralized equity to 2008 would never have been allowed.

When loan was made and property offered as collateral, it is possible that title or escrow, then lender, missed something;Blown sale or defect in foreclosure, occasionally procedural but usually concerns noticing;Or, Secured creditor or entitled claimant challenging bank's foreclosure.There may be other reasons.

Is there an appraisal of collateral available for review?

The banks are not making loans to millennial's without bonafide co- signers with money in the bank and have high credit scores, collateral and do not have school debt picture.

Something about "additional collateral" which I don't fully understand.  

Which one would you prefer as collateral?

I will bundle both together for one loan using them both as collateral. 

What are the things to consider when exploring developing on our own (which would entail personal collateral and cash investment) vs. with an investor partner?

There are ways to mitigate this risk by buying notes that are in states where the foreclosure is simple and quick, like it is in Texas.5.Real estate notes are backed by real estate.The underlying collateral is real estate.

Consider too the value of SF to the seller, avoiding gains on the sale deferring taxes over the term and obtaining a higher interest rate than they could invest elsewhere with similar risk along with the ability to sell part of that note for cash requirements, they can use that note as collateral and there are few annuity contracts they could ever get into that offered these benefits.