@Rick Wang so you actually hinted to the solution of my problem but I would like to clear a few things from your post. 

I couldn't believe that a hard money lender is going to just give you the funds without reassurance of you actually being able to buy the property, but maybe I'm missing something.

Step away from this nonsense.Unless she has a source of income to actually buy this, that she hasn't declared to the local housing authority, I will bet that she wants to use her Section 8 deposits to  you to purchase the house. and if she hasn't declared her extra income to section 8, then she's just defrauding the system.You can either say "no" directly to her, or just say that you still have a mortgage and you can't enter into a lease purchase agreement for at least another 12 years.

Hey John they are actually from florida at least that is where the call came from .

@Daniel MoctezumaIf it actually is a deed then the foreclosure was finalized and the Bank owns it.

Or do we try to build relationships with possible PMLs to keep in our back pockets for the moment we do actually need them?

To actually prove in the courts that a tenant is living in the unit is difficult.

I actually walked this house.

Property is in good physical condition but there have been some expensive repairs and all the utilities seem high to me.

If you're in the area this evening, the monthly meetup that @Adam Schneider mentioned is actually tonight at Mellow Mushroom in downtown Raleigh from 6-8 PM.