The upside of doing this is that servicer will take your payment, pay out the underlying mortgage, and then pay the son any remaining balance every month.

The home was previously a foreclosure so she got it at a really good price ($440K) and has $429K remaining on the loan. 

You would have lost all of that cash flow in the meantime, and would have actually lost money due to inflation and your money just sitting there.Second, why would you assume that interest rates are going to remain the same during the downturn?

The opportunity cost of the equity, taxes, and maintenance costs in a primary residence is very high.In terms of the options that your laid out I would rent and then personally rank the remaining options as: #3, #5, #4, #2.

When you're in an area that has a good market, most people selling lots aren't going to let you tie them up in order to do these basically "build to suit" deals, especially if you are inexperienced, and not even the builder.

Please share your tie breaker strategy!

What happens if I want to buy a home with cash and the owner has a remaining balance on their mortgage or if it's pre foreclose

@Robin Morales at that point the problem is that if your friend no longer wants to live with his parents he may want to evict them, which of course he wouldn't want to do, even in that scenario your friend is essentially tied to the property and his parents until they decide they want to leave. 

I would like to remain site contractor due to my abilities and love the work more than the free time.

For those remaining, you need to offer them something that helps them out.