Each lender will have to follow Fannie/Freddie guidelines unless it's a portfolio product.

The reason should be communicated to the tenants.Since this is a case where the landlord wishes to terminate the lease early, the landlord may want to consider offering a cash incentive to the tenants.If the tenant doesn't agree, they're legally allowed to remain tenants until the remainder of the lease.

That said, it's certainly impacting my project in numerous ways and I will have legal expenses. 

These types of lenders often have more flexible criteria and can help with refi for rental properties without all the strict conventional guidelines.

I'd imagine having a roommate who also gains equity would turn into a legal nightmare when either of us decide to move. 

The reason for this is that existing loan guidelines are set up to favor people buying their primary home.

Each HA uses HUD guidelines but has the ability to modify the process upon HUD approval. 2. many landlords do not fully understand  the ins and ours of the program.

Im looking at a property that has two legal units and a third that is not.

May not be legal, but doesn't seem like it impacts your situation here. 

I agree that the cost can be outrageous, and it may be worth it if they truly live up to their end of the deal with oversight, reviewing your deals, avoiding legal traps, yeah there’s a lot we don’t know starting out.