After reading these regulations a little more thoroughly and conferring with Opus 17, I agree with your assessment. After reading and taking this into account, I advise to go ahead and list your relative's name and the amount of mortgage expense paid as a rental expense.
My only reservation about claiming this is that without a 1098, this could trigger an audit and i didn't wish for you to risk this. However, while the lack of a 1098 may trigger an audit, as long as you you have loan documents and proof of payments, you should be able to claim this interest. if there is an audit, be sure to have the loan documents and proof of payments as proof. Also be sure to be able to cite those instructions that you listed above.
[Edited 02-17-2021|03:48 PM PST]
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