Are Hard Money Lenders really trying to make loans and then Foreclose on the real estate?

Nope.

Certainly not a hard money lender that makes loans nation wide. But, if you have some little ol feller making loans only in his local neighborhood/area, then I would imagine that this "loan to own" scenario does happen.

My experience is that when a borrower defaults and I have to go thru the foreclosure process on one of my hard money loans, what typically occurs is that the property mysteriously is not worth what the appraisal indicated it was worth.

Now how could that happen?

Borrower drama, Attorneys, Bankruptcy court, Bankruptcy trustees and judges, WAY to much brain damage to make a living going that route... Only in about 1 in 20 deals will a lender go through a default, foreclosure, fix up, re-sell process and come out "smelling like a rose."

This is just my experience...