I use to work in lending for a large regional bank. They should get a home equity line. With decent credit the interest rates are insanely low compared to other loans.
If they can't get approved for a HELOC at the bank... you need to turn them down as well. The personal banker at the bank has an incentive to help them get approved. The bank has an incentive to approve them. If the bank declines them then it means they are too high risk. If a bank doesn't like your credit they normally come back with a higher rate first, and only decline when you are too high risk even at higher rates.
You could even send them to lendingclub. ;)
Well, a promissory note is supposed to be backed by the home equity in Wisconsin. If they default I put a lien on the property and the bank typically settles before it goes into foreclosure.
Wisconsin might be different, but this isn't how it works in most places. Normally the first mortgage is the primary and they get their money before any subordinate secondary mortgages. If they have a mortgage then the bank already has a stake in the home. Their stake trumps yours. The house might be worth 200k with 100k of equity. If it gets foreclosed on the bank is just looking to get their 100k loan paid off. They aren't in the business of real estate and flipping homes. They want it off the books, and if someone offers 100k they will take it. This means your loan does not actually get paid back when the home it sold. The bank gets paid back first and they don't care about you so your stake in the property is worthless. Again, this might be different in Wisconsin but I would research that and hire a lawyer to be sure.
If your loan did have the ability to trump the original mortgage then the bank would have to ok that... which they won't normally do.