@Frank Garcia  yes there are laws regarding contacting people in default, and you should learn those laws in your area before contacting people in default. 

A lot of people in those areas are struggling to keep the water on (many have defaulted, and that's been all over the news here becuase the city wants to turn off their water, and people feel they are entitled to have their water on without payment).  

A defaulted loan has not other utility than being a defaulted loan.  

I've heard that on a short sale, a bank will accept a certain percentage of their appraised value, which varies depending on several things, including whether the existing mortgage that's in default is FHA.What's the percentage for a property with an existing FHA mortgage?

@Gary Alford Buying free and clear properties when you buy on terms are generally installment salesA note and a security instrument like a deed of trust or a mortgage is customaryYou want to do a thorough inspection because you will be responsible for all maintenanceStructure the note to make sure you can afford all costsI generally open up an escrow account and place escrow instructions if I default on payments the owner can receive ownership of the property without a foreclosure after six days

To protect you, in case I don't make the payment on the mortgage, I will sign over a warranty deed to be kept in escrow, with the stipulation as if I default, you get the deed without a foreclosure.I will pay the following: principal and interest in the mortgage, insurance, taxes, and maintenance.

However, I were to take the unit off the market for a significant period of time (for my needs), I would require a substantial holding deposit that would cover my loss if the tenant were to default. 

In case of default the originator has to buy it back.

Then I'd hope the guy defaults!

On the whole, though I haven't done any yet, I just have a gut feeling that a vacant property whose owner has to be hunted down via skip trace would be a great lead -- especially if they're in tax default.