Maybe they have some other bill they need to pay such as a medical bill their insurance considers unnecessary so they have to pay out of pocket for it and time is important to get treatment. 

Due to many complications, we fell into default with the 2nd lien holder and owe 170k and are facing foreclosure, set to be sold in auction soon.

While an LSA can play the role of collecting / remitting payments, accounting and enforcement in the event of default (foreclosure), its not necessary to have an LSA and may add extra layers of complication or expense.I’ve found that if you have a reliable escrow agent: they will handle the crafting of the note and mortgage, arrange for necessary signing / notarizing / recording of the documents & handle distribution of loan funds.

I inevitably would like everything to flow through a single holding LLC, but seems very complicated when considering Title, Mortgage, Management, etc.  

They're excel based and can be quite complicated. 

Mistakes are easy to make, & you should also have a CPA guiding you - well before tax time while you still have time to do the planning to avoid unnecessary costs.  

A good deal is a bit more complicated than the cap rate. 

If no, then you're risking losing a tenant and incurring unnecessary expenses.

Account Closed you are asking a very complicated question that cannot be answered in a single post, but I will try to point you in the right direction. 

It's just not that complicated.