Keep in mind hard money lending doesn't require a MLO endorsement, only consumer lending does.Just my opinion, if you have kids (I have 4) you'll have all these same issues times however many kids you have...you better be ready to stomach it. 

Without an eviction proceeding and the Sheriff on site to forcibly remove tenants and their property, you are stuck writing letters,asking them nicely, waiting, praying, hiring someone to help.Used to work for a company that had issues with squatters and in particular, a certain tenant who intentionally screwed the company by forcing us to file an eviction, and then proving we (or rather the attorneys) processed it wrong, and then causing us to start over...

We paid much more on what was owed on the second lien and the question is why the excess proceeds is not going toward paying the senior mortgage?

We recently sold our first rental and are now trying to use proceeds to get multiple units and diversify. 

After this you can refi the free and clear ones and use the proceeds from the refi to pick up a few more.  

We want to share the proceeds three ways with the 2 other siblings, dad doesn't want any money out of it.

Is the seller willing to start an eviction proceeding on her brother?

This is obviously insane, however after a lengthy email outlining my complaints they have agreed to waive the closing costs if we proceed.  

Jim,The temptation is to just turn over the proceeds of the Insurance and trust the contractor to do all the necessary work. 

I would also imagine the smartest (but hardest and most time consuming) move would be to knock it down and build a brand new house.