With the non-judicial is that just the lien-holder(s) exercising their right to call the note due without any legal process?

This exercise will help you clarify your goals.   

In my opinion, there is no way you need to buy this house and you need to exercise patience.  

This was a good exercise in finding CORRECT info on the property and learning how the tax calculations are performed.

So I am cash flowing 1450 - 1004 - 174 = $272 monthly and I have about 4K of my own money left into the property when all is said and done and it is leveraged at about 80% with about 40k in equity (82% cash on cash return per year).At the end of the 3 year option period, if the tenants exercise the option, I should have a payout of about 49k and I should have accumulated nearly 10k in cash flow.

When the policy changed the bank will know but generally wouldn't exercise any heartache for you.

.- Lease/Option - don't do major property improvements before you exercise your option unless the whole deal is escrowed with an attorney.- Lease at a low payment.

The reality is it is very rarely exercised by lenders, even when they know about a transfer.

You otherwise need to make sure you document the comings-and-goings of this person in case you get pushed into court.Courts could lean in favor of the tenant exercising normal day-to-day living.

They moved title without my permission so I could exercise DOS if I wanted to, but I don't want to, I like the income, I understand rehabbers sometimes need a little room to maneuver.Having said that, I'm not real happy about the change in title and for that reason and a couple others I probably won't be lending to this guy again.My real concern was with regard to my business purpose loan becoming a consumer loan since title went from an LLC to an individual.