Private Mortgages

[xxThe_Lebowskixx]

Real estate market crashes
Mortgage companies crash

I buy a house for $200,000

I sell it to someone on a 30 year mortgage at a higher interest rate then a bank would charge. If they default on the mortgage, I get the house back.

Current mortgage rates are 6.446%, so I do (??) 7.446%,

"Your estimated monthly payments are $1,391.04 and you will pay $300,775 in interest over the life of the loan."


Problems:

If they don't pay for house insurance, the place is destroyed and they default on the mortgage.

If they turn the house into a meth kitchen and the government seizes it (would I get paid?).

Question: How do I pay taxes on the mortgage payments they make to me?