Just because the note stays in the seller's name doesn't mean you're risk free.Among other things, if your failure to pay screws the seller into losing his property to foreclosure, he can sue you.And if that happens, who do you think the court will have more sympathy for, the homeowner who got screwed in the transaction, or the sophisticated investor who pocketed cash from the deal?

Failure is not an event.

As the Sheriff says in Cool Hand Luke: "What we've got here is failure to communicate.

They should absolutely switch providers and seek recompense for the massive failure here.

So my strategy is recession-proof, no failure, no way to lose.

Because they are breaking the lease early we now have this extra cost due to the persons failure. 

Like I said, I've seen some failures in this area.  

The fear of failure is lingering in the back of my mind. 1) how do overcome this fear2) how do I differeniate to true REI vs the 'scammers'?

Failure to register is subject to a fine up to $100 per day per housing unit.  

So expect lots more scrutiny, like real estate salesperson license (476-367472) indefinitely suspended and fined $25,000 for failure to disclose license status to client and for improperly acting as a dual agent in a transaction in which he was the buyer.