Also, because it is THEIR home, you do not have the greatest position, as if they sell and run, you may be left high and dry. 

I'm looking for creative ways to be involved and add value to the relationship, but have no experience in commercial property or this position in the deal. 

Just got back from work & I’m floored by all the positive responses!

Sell it, take the money you made from it and go buy rental properties that create positive cash flow in markets that make sense (i.e. rent to purchase ratio's at or equal to 1%).

I then called around to local banks in the area, they put me through to the commercial lending department, and they were able to provide the remaining rehab financing and some cash out (they paid off the original owner finance too and took 1st position).I didn't have a ton of experience but good income and credit. 

Let me know if you have a positive experience with them.

Thanks to a lot of financial podcasts my family is in a much better position.

Most likely is that the loan being foreclosed is in 2nd or 3rd position.

I feel there is a great opportunity for us here with these leads and just want to make sure I am completely clear on how to position the negotiations. 

You can still show a paper loss position.