I hate to hear these sad stories. You should check on the status of the first lien and see if he is current on it. If not, you should consult a real estate attorney and see what your options are.
I think you should fully understand what you are dealing with and talk to a Lawyer and also a CPA. There are many creative financing remedies that may help but its more complication and maybe not a one sentence answer. I think its in your best interest to keep asking and save the house. Now is the time to get this problem working out. You also may come out smelling like a rose. Its possible the property went up in value since the sale took place. Think Positive! And hang in there!
I am going to take your advise and contact Jim Hogan.
Thanks to all!
If an investor is taking a problematic note off your hands, you need to realize you are not going to get all the money that's coming to you. You have to give the investor an incentive to deal with your delinquent buyer. The investor, if you find one, will buy the loan from you at a discount.
Best of luck.