I think @Jay Hinrichs touches on the important point... if you can reasonably expect appreciation, then it might be a good bet/gamble. 

I just searched around and i believe you're certaiy right: there is a distinction how losses (not sure about depretiation?)

This would allow all of your losses to flow through, without limitations due to them being passive.

If you target a 2% property that ends up being C or D class, there is a good chance that you will experience increased credit loss (uncollected rents), vacancy, legal expense (for evictions), and repairs and maintenance.

This means that the policy limits are not sufficient to fully repair or replace the buildings in the event of a loss.

In some cases, there was no fraud and no loss of any money by investors.  

I guess that may be different than a foreclosure in how it impacts the uncles credit, and how the banks realizes the loss on the books.  

Hey guys,I sent my first DM marketing campaign a few weeks ago and are just now getting phone calls.I have a lead that has a good amount of equity ($100k+) but due to divorce she is now in heading to foreclosure with trustee sale scheduled for 10 days for now.Now she is ok walking away with some money in her pocket and selling the home to us wholesale after we stop it from foreclosure.The problem just came up that the title is held in joint tenancy with husband who she no longer has communication with due to the divorce.Is there anyway around this issue, or should I chalk it up as a loss?

Huge tax breaks, near 0% vacancy loss, and a substantial discount on the cost of the property seem like good reasons. 

We do have replacement cost and loss of use coverage.