I would consider renting my unit out and buying another multi family (providing positive cash flow against that home) Any thoughts on how to tap into the equity?

Now the first position lender is foreclosing.

besides standard this is what I want: - Tenants actions (previous bad experiences)- FoundationMy current policy doesn't cover any of them, the foundation is the most vital part of a house and I am surprised they don't cover it.

If so, then keep moving forward, if not then save more emergency, pay down some of the leverage to get yourself in a more comfortable position.

I buy property with the intent of surviving a serious down turn by buying Subject To and selling to Tenant Buyers which protects my long position.

People like you in your position need to find a piece of content that tells you "OK if the seller asks you this: " but what if I bypass the 2.54 points of the mortgage proceedings into my IRS  bloompot horseshoe butter with peanut sauce".. and tells you exactly what to answer, in order for you to be brave enough to start (The answer is blueberry btw!).

I get that a HML company manager can do pretty well if he raises significant amounts of money from investors, but for the investors themselves i've never understood why they would lend money (often small amounts below 500k) for high risk projects and junior position even for 10%.

This can put her in a tax advantageous position (consult with your CPA) while deferring/avoiding taxes (depending on how you structure the deal). 

Not positive but i think they do differentiate asset classes (at least in Jefferson and Shelby County).

All positive tests I've seen ARE BRIGHT red.