At the end of the day, your servicer is there to keep your loan compliant and to process and apply payments.

Section 8 is has the benefit of guaranteed payments by the government.

Since your goal is lowering monthly payments for better cash flow, it might be worth focusing on reducing expenses elsewhere or exploring other investment strategies.

Do they have a way out of the balloon payment?  

The coverage limits are as follows:$200k -> Dwelling Premises Liability -> $300,000 per occurrence Medical Payments $500 per person / $25,000 per occurrence Additional Living Costs And Fair Rental Value -> $19,000 Loss Assessment Coverage -> $1,000 Ordinance or Law -> $20,000 or 10% Water Damage Limitation -> 10% ($20,000) Deductibles All Other Perils -> $2,500 Limited Theft Coverage -> $2,500 Water Damage Deductible -> $5,000

Can I get a loan for the down payment / construction costs2.

somewhere in the price range of 50k-100k, because thats  what I can put a 25% down payment on.It sucks not being able to take advantage of an FHA loan for my first home purchase, but I don’t see myself moving soon because my entire family lives in LA. 

I would offer it on a land contract to someone wanting to live there for around 1500 and small down payment or sub2 with a large down payment and monthly that would cover PITI.

Credibility Package - $7,800 reduced to $5,800 if you sign up right away. 2 to 3-month payment plans available. 

The only negotiation with the tenant after the judgment is the payment plan for the money owed to you.