I am well aware about 2nd positions being losers in foreclosure but this note had a theoretical equity in it.

As I'm sure you are all aware, they require you to be an accredited investor, but the evaluation is based off self reporting through check boxes.

Any potential pushbacks from the seller that I should be immediately aware of?

So it is beneficial if you are aware of all the options available in my opinion.

They may not be aware they have done this.

But you can make the arrangement, the lender needs to be aware of what's requested. :)

Nearby, recent comps reflect the price, even if the neighborhood is a war zone.

That's another area I haven't looked into, or really even was aware of to be honest.

The only reasons for a cash only deal that I'm aware of are if the price is too low for a mortgage (under $25,000 or so around here), or if the damage to the property is so excesive that the bank won't secure a mortgage on the property.

Are there any special issues in buying these that I should be aware of (vs. buying a non-HUD home)?