If you didn't trust their judgement you shouldn't be working with them.

Texas can be pretty tough on deficiency judgements..

No judgement but what are my options here?

Borrower has outstanding federal tax liens, judgements, code enforcement violations that are not paid, etc.

If he closes shop, he'll be facing judgements in court from these providers, etc.Business owner owns roughly 50% of his home valued at $300kBusiness owner's FICO score disqualifies him for more traditional / sensible financing which is why he opted for short term working capital in the first place.Proposed Solution:Come in and pay off the existing $40,000 owed to short term working capital providers on behalf of the business owners.Take deed to the property under a sub to arrangement.Lease option the property back to the business owner allowing him to stay in his home.Charge a reasonable fee for the $40,000 and lump that in with the monthly mortgage payment and spread the payments over 24 months.Expected Result ROSY Scenario:Business owner will free up cash flow.

They will look at the file and make a judgement call as to whether or not the former owner will try to file a lawsuit or whatnot.

You provided a lease to the court or at least an amount when you receive the judgement correct ?  

They are not getting rained on or snowed on during the building process and you can drug test your employees at the factory, vs. a job site contractor.  

I don't know about real estate prices but where I'm at it's been raining steady for three days and I'm starting to worry.

Also its important to note.. that during the GFC the US govmit put a moratorium on banks filing deficiency judgements against borrowers.