Obviously dealing with a drunk produces a lot of drama and trauma.
I'm guessing he's not the only one on the loan. If so, this complicates my solution, but...
In this situation, you need administrative control of the loan. You can't depend on this flake to either honor his commitments to you, much less remain available. So, stop going down that dead end with him.
If you don't want to cure the default, and maintain the option to buy the house, then you walk.
If you want to salvage the deal, forget the lease/option route. That was over once the drunk failed to maintain the loan, or lied to you about the default. This would normally be a breach of agreement in a standard lease/option agreement, in which case the Optionee would demand return of all monies paid to the Optionor (drunk), as total liquidated damages.
Well, that would require an attorney, and a few years in court. Sure.
Request that drunk give you access to his loan account online. This allows you to check everything about the loan, without having to talk with the bank.
If you like what you see; want to cure the default; make the payments from now on; and want to own this house; then proceed to:
1) Secure a power of attorney with online, administrative-rights over the loan
2) Have the drunk deed his house to you in a recorded Land Trust (extremely important) showing you as the trustee, but not disclosing you as the beneficiary.
3) Cure the default.
4) Take over the drunk's loan payments (This is not an assumption, and don't even mention assumptions, or taking over loans with the bank ..at all.)
5) Offer the drunk a free place to stay for 12 months to sweeten the offer?
6) Create a note for the drunk's equity, if there's enough to screw with.
1) You own the house.
2) You control the loan.
3) You become a homeowner.
4) You don't need credit.
5) You don't need to prove income.
6) You improve your financial statement.
Nobody can tell you what you should do. It all depends on the drunk(s) cooperating in solving your problem, and your capacity to cure and maintain the loan. If not, than you walk. Lesson learned.
However, again you're done with Lease/Options with this drunk. You want the deed. Or he can suffer a foreclosure, but there's no point in salvaging the drunk's loan, if he won't cooperate with the above solution.
I mean making payments on a drunk's defaulted loan, shame on him. Continuing to do that, and you're an idiot (said in the nicest way imaginable).
Good luck. Hope that gives you some idea of what's possible. I bought my third home this way. It was way bigger, nicer, and more than what I could afford to finance with new financing from a bank. So, I didn't. The seller and I said, "Screw the bank!" And I've been saying that over, and over, and over again for twenty-plus years!