In Atlanta, Georgia - unless you get caught doing something illegal, it's considered 'grandfathered in' and won't be a problem when buying or selling.

If you have other money to grow your portfolio even with $107K left in the property then  hold the property. 

Quote from @Timothy Frazier: Is it a bad idea to use a hard money loan as a downpayment for a turnkey property?

This is good because you don't have to come up with the money, but you do have to tell all.

It's a dishonest promise.If you are in foreclosure, it sounds like you are either there or headed that way,  what you are encountering is a "foreclosure scheme" they are illegal in most places and for good reason.

(saving the money to have your own deal is the worst idea)

Does Hard Money typically cost 30-40% of the purchase price?? 

OVer the past month we have seen hundreds of millions / around $1B in defaulted private money loans come across our desk.

(Manhattan condo starts at 2M) I can guarantee 95% properties are running illegally. 

.: Top 25 "hard money" lenders (Philadelphia loans only) by volume.1.