I agree with IL. He either qualifies for the mortgage, buys BOTH parties out of the house, or doesn't get the house (as he would be buying more then he could financially handle, aka taking example from parents). If he gets the house the other way, then your stuck in the same situation, with your b-i-l probably wanting to stay bouncing between you two.
If you let him buy your b-i-l out, then how would you even go about it? Just transfer your b-i-l's name to his, or provide him with a deed, which gives him control of the house, with an unsecured debt to you? (BAD IDEA, BAD IDEA, BAD IDEA, BAD IDEA)
You need to think with your head on this, and realize being so close to family, which owes you a lot of money and your in debt on, will just eventually turn your stomach to deal with them.