Are there any usury laws that are applicable, some states have usury laws on residential properties regardless of it being owner occupied or not.They also have collateral issues with "junk houses" frankly, banks can take a bath from foreclosures on some 20K house, who would buy it?

If the lender/servicer forecloses on the note, then there is no more note (because they now have the collateral that was securing the note).

I'm sure collateral helps too.

But, if Ky walks up to me on a property I own and wants me to finance 50% and get a loan for the balance, Ky is going to need some strong financials, possibly other collateral, a track record of management as well as a good credit history and cash flow shown off the deal.

If you don't have collateral, then there's nothing to loan against or to mitigate the risk of the lender.Do you have an income stream?

I usually use lenders/investors who use the property even if seller carry/owner financing as collateral or down payment but the lenders I have don't lend in TN.

Has anyone recently had luck getting a home equity loan or loan collateralized based on rental homes?

I was thinking the same to also be able to use those as leverage for a portfolio loan or a LOC using them as collateral.  

Only thing is that recorded deed of trust is in default by the first (i am third) and can no longer be used as a good collateral.  

Lenders want a strong asset as collateral, a strong borrower with experience in the business they are proposing, a good area where the asset is located, etc.