Once that time-frame expires (90 days in CA if I’m not mistaken), then the lender forfeits by default their ability to call the note due to the take over and change in ownership, thus eliminating the risk for the note being called at a later date for this reason.

In the lease they're are stipulations for all of these things to occur and if not the lease will be forfeited.  

. §§ 250.512)Record Keeping of Deposit Withholdings: No StatuteFailure to Comply:oAny landlord who fails to provide a written list within thirty days, the landlord shall forfeit all rights to withhold any portion of the deposit, including any unpaid interest thereon, or to bring suit against the tenant for damages to the leasehold premises. (68 P.S. §§ 250.512(b))oIf the landlord fails to return the remaining deposit, after withholdings, within 30 days, the landlord may be liable for double the deposit amount plus interest. (68 P.S. §§ 250.512(c))Lease, Rent & Fees:When Rent Is Due: No StatuteRent Increase Notice: No StatuteRent Grace Period: No StatuteLate Fees: No StatutePrepaid Rent: No StatuteReturned Check Fees: Allowed, but it shall not exceed $50 unless the landlord is charged fees in excess of $50 by financial institutions, upon which the landlord can charge the actual amount of the fees.

they have already forfeited their security deposit, do that get applied to fixing these things? 

After looking it up I saw the deed was transferred to the United States of America with a mailing address of a marketing group auctioning seized/forfeited properties.

Said if he wanted to leave I needed 1 full months rent and he would forfeit his security deposit also said if I was able to rent before the month ended I would return that part of the rent. ( he also owes me some $ for not switching his electric bill right away) He freaked out and thinks that is very unfair he should loose his security deposit and is trying to find another person to take over his lease now.

For example, we’d be open to terms stating that:Three months notice is required to terminate, andWe additionally would forfeit our security deposit (which is equivalent to 1.5 months rent)These are just example terms: We are absolutely open to negotiating terms that we can all agree on as fair.I’d like to emphasize that we do not yet have a house bought, and this entire discussion is hypothetical.

If i go about this by trying to get a conventional loan, will that be forfeiting my First time home buyers opportunity?

The buyer and seller ended up agreeing to extend the option for one additional year in return for the buyer paying $10,000 of additional option consideration (which meant that it would be fully applied to the purchase price, but it would be forfeited if the buyer did not buy the house).

(Haven't filed taxes and my CPA hasn't signed off yet but to my understanding that's how that should go this year)  Either way that temporary tenant helped pay for some of the rehab + they also agreed (in the lease/contract) to forfeit their deposit when they moved out to their next location (traveling workers).