House Burned Down: HOA, Mortgage Lender, Owner at impasse

[Kenneth Butler]

I recently found a burned down house in a very desirable neighborhood. The school district zoning is one of the best in the city as well. Here are the caveats...

I have been communicating with the owner. He wants to make a deal, but he's in a tough position.

I spoke with a Real Estate Agent that had a sign posted just a couple of houses down. She told me that she used to live in the neighborhood and her sister currently lives in the neighborhood, just a few houses away as well. 

She informed me that the owner of this house has had a fairly public discord with the HOA, who has recently withdrawn a claim to the property. To make a long story short, there is suspicion that the owner may have committed a fraudulent act.

The house burned down in September of 2018, and the owner said the insurance company told him they are waiting on a report from the fire dept. However, the fire dept told the owner that they have completed everything they were obligated to complete. (They seem to be stalling.)

The sign posted outside the property states that the property is in pre-foreclosure, similar houses in the neighborhood have recently sold for between $360k-$400k. The owner has let me know he still owes upwards of $200k.

I know the deal is extremely hairy, but that just means most people don't want to touch the deal. So me being brand new to investing, I can't help but feel that there is still some value here. Am I wasting my time? Is this an impossible situation? The neighbors and the HOA MUST want to get rid of this eye sore. So is there anything I can do to help facilitate the reconstruction of this property. Any advice would be greatly appreciated.