At this time, FinCEN is not proposing a definition of “loan or finance company’’ that would encompass other types of consumer or commercial finance companies, or real estate agents and other entities involved in real estate closings and settlements.

Does this mean that the property was wiped clean of all debt when it was sold to me at auction?

Hey @Jeff AmoreThe information you provided, in and of itself, definitely isn't enough to eliminate the possibility; but I'd need info on a couple other critical factors before I could really say one way or the other.A few of the questions I'd personally want answered are:For one, how much cash do you need to bring to the table and how much debt are you taking on?

However, we both have debt.

Remember cash is King and Owner financing is better.Understand creative financing, always ask for owner financing, possession, subornation, substitution of collateral, delayed settlement and discounts for early pay off.Offer less - guarantee your equity profit - some say, "If you are not embarrassed with your offer, you are offering too much!"

I would look at how much excess cash flow is present and figure out how to apply all of that cash flow to pay down the debt on the properties to eventually refinance the upside down loans away.  

The current tenants have expressed interest in purchasing the home, however they claim they will not be able to get a bank loan due to outstanding debt- but that they do have a downpayment.

You should also consider having enough to satisfy all of your mortgages, debt obligations, and future college expenses for your children.Keep in mind that insurance companies sell term insurance because they are pretty confident you will outlive the term.

In 2009, after the collapse in the housing market and after the banks cut off further funding and called in loans, you were able to buy 1st mortgage debt for .10 cents on the dollar. 2nd mortgage liens were available at 1-2 pennies on the dollar.

You make a good purchase, increase the NOI, pay down some debt, double your equity and move on (via a 1031 if you're smart).