Jon,
If you think of using your strategy with an owner occupied single family (1-4unit) , home and you will not occupy it as your personal residence, you need to be aware of Civil Code 1695, if the owner has a notice of default filed against the home. It has very precise steps that must be followed or you could find yourself in serious trouble. I have included a link to the law below. AITD's, Wraps, Subject to's are all similiar strategies and I agree with Jeffrey on the potential pitfalls.

Hi Jon,

This is what we call a AITD (Wrap Around Loan) which is a really bad idea for both the Buyer and Seller. Since most (99%) loans have a "due on sale" clause, the transfer by quite claim to title is a sale. The Seller is still responsible for the loan on the property even though they no longer have the deed or own the property, the Buyer can be faced with the lender finding out about the ownership change and call the loan. So lets say the new buyer has taken over a loan for 300,000 and suddenly has to pay it back or loose the home. There are other considerations including insurance issues and possible lender fraud.

I strongly urge you to consult a real estate attorney for advice on this situation before considering.

We used to see them done years ago and they are now back, but as you can see there are big pitfalls to them for all involved. Many escrow companies will not do them since they are so risky.