Are there any other well-managed lenders out there with a similar product but no minimal threshold for owner-occupancy (or one lower than 50%)?  

You'll have a tenant in place the entire year, have minimal other expenses, and mostly just have taxes, insurance, and debt service to cover. 

On the flip side, they also offer moderate returns and minimal upside.

It is yours and my money the government has (or will) taken away from us so that they can give it to those who have shown that they can handle the responsibility that comes along with the purchase that must be made with it.And then we could debate how much it is costing in delaying the economic recovery in the housing market by all those who are again ending up in foreclosure continuing the cycle that should have already ended.

The guidelines stated managing a rental property required minimal time and effort and claims of "real estate professional" status based on this should be scrutinized closely.

However, it is the delay caused by the seller.

But if they have minimal retirement savings (less than some number pushing or over a million) and has not been working, taking on a big debt at this point is going to be a HUGE and long-lasting lifestyle change.

They also lack any reserves.Those are the slumlords.Guess what happens to those people, they do not cashflow in the long run and cannot afford the extensive delayed repairs when it comes time to sell.

Whether it is "viable" - I would say you have to look at numbers for that; part of the numbers you have to evaluate will include your added expense for completing the foreclosure as the new noteholder, and whether any delays to the foreclosure process are introduced by your acquisition of the note.If the sewer is a municipal service, I doubt that lien will get wiped at auction.

Mike, not sure about Nationwide, but your problem is consistant here in SO CAL, home of the REOs and here is my opinion of what has been going on.Banks have been slow to get the REO's to market.Banks took a more relaxed/delayed (for lack of better terms) process to foreclose during the holidays (Nov.