Keep in mind I would not mind putting up that home as collateral, or even my car, as I know I will always pay.

But, currently, the NPN market is very bullish (given the hype about Notes and their performance in REI network) and he doesnt want me to get my fingers burnt with a bad deal especially when it will be my first deal.I do have a promissory note with his company but his company holds the lien on the underlying property collateral.

Out of those that get accepted is where you dig into the collateral files and match up against the Title report to note any defect in title and confirm the assignment chain. 

Can you use unpaid (with the current mortgage) rental property or portfolio of the rental properties as collateral for a new loan used to purchase another investment property?

I have set up the loan on an escalating interest rate as follows:Months 1-5 = 8%Month 6 = 9%Months 7-9 = 10%Months 10-12 = 12%It is a 12 month loan with a balloon at the end for payoff or I get the collateral (with any improvements made at rehabber's expense). 100% of the loan amount is going to the purchase price, flipper is paying rehab costs out of pocket.

Received the collateral files, reviewed myself for any red flags (break in chain etc) and then sent the files to the lawyer who was recommended by someone in the note world.  

I get a warm fuzzy feeling knowing there is only enough collateral to cover 40% of the loan.

They didnt really care because the house was the collateral. they never asked for a down payment unless a so do deal.

Gift funds are documented and scrutinized.You can use a loan for the full amount of down payment and closing costs if it is secured by collateral. 

Will a bank have to run my credit and check my income to debt ratios like a normal mortgage or is the collateral of the property enough.