Once you have the property converted to two legal units, it's going to depend on business vs. personal useage. 

If you need financial help, ask under the "Finance, Tax, and Legal" forum.

My guess is You will need to go through a foreclosure process in this situation as a legal remedy.

Legal competition has cut the cost of a Reg D offering from $25,000 to $8,000.  

Finally- you can eliminate 95% of the troubles and risk by simply having professional and legal screening and management processes, so don't sleep on that piece. 

This increases the perceived risk and perhaps the legal fees to put in place and then defend if necessary. 

Here is a detailed look into this issue:https://www.biggerpockets.com/forums/51-tax-legal-issues-con...

Fannie does have a guideline that allows a property to be deeded over to an entity so long as the original borrower is also in the entity, but you have to wait 6 months of seasoning and maintain continuity of ownership.  

If you need financial help, ask under the "Finance, Tax, and Legal" forum.

The issue is legally be allowed to raise rents and getting around what the city believes is fair market rents.