Need advice on first potential sub2 deal

[tee2]

I am talking to a seller about his 3/2 sfr 1300sq ft property that is about 2.5 years old. The original mortgage is $109,000 with an adjustable Int rate that started at 6%, I don't know what it is now or what it will be, and it has a  $20,000 second on it. The seller is 3 payments behind equaling $2550. Bank of America is giving them until March 11th to bring the payments current. In today's market the comps set the FMV at no more than $130,000 even though an assessment in 2008 valued it at just over $138,000. The area will support a tenant/buyer at the $950-$1050 a month range. Based on the numbers above do you think this is a deal or no deal?  DO I bring the payments current and consider that "Pizza money" as $cash$ would put it? What about the Adj rate, what would the typical terms be and how high could it go? Do I just pass the adj rate on to my tenant/buyer? What about the second mortgage? My property report does not tell me if its a HELOC. Constructive advice for someone trying to get their feet well is openly welcome.

[slipring]

With only a few deals under my belt and still a lot to learn I would structure it at a purchase price of what he actually owes with payments at at least $100.00 below what you can get TB's to pay on a land contract.  Have the seller cover anything over that regardless of the interest rate. With the numbers you stated I would sell via L/C at 145,000.00 - 150,000.00.