And while I don’t think it’s grounds for denial, I do worry about future implications as her condition deteriorates.

So there's no speculation on my part.Wait, you haven't factored in the EXTRA costs to the lender should you not perform:- Legal fees for foreclosure proceedings- Extra holding costs during foreclosure process- Risk of property deteriorating during foreclosure process- Risk of pissed off borrowers (because he's being foreclosed upon) doing more damage to the property before the foreclosure- Risk of market decline in the time period during which the borrower has defaulted and the lender is trying to gain ownership or recoup costsBy the time the foreclosure is completed, that "80% of the as is value" could actually mean the lender has more than 100% of the as-is value invested into the property.In addition, the lender has now invested a lot of time and effort into the property, meaning his total investment could be MUCH MORE than the as-is value...and potentially even more than the ARV.There's a reason that banks require a downpayment -- they are smart when it comes to their investments. 

Or would their business dealings deteriorate at a pace that would cause financial ruin within a year or two of doing nothing?

But at the time many news articles where stating all the reasons the former would remain a solid investment and the latter would continue to deteriorate.

However, the city deteriorated along with the economy, and almost every tenant (except 2 or 3) has been a headache to manage.

Instead of dumping thousands into their units they just drop the rents as the units deteriorate so they do not have to put a dime into them.

Also the property could deteriorate further between now and the time you get it.

The CAP rate would increase if the asset deteriorates (goes from class B to class C) or the location becomes less desirable.

From the its bleak financial situation, deteriorating infrastructure, to its reduced (read almost non-existent) city services, etc. etc.

I don't know jack about $90k properties, what St Louis tenants would demand in one, or how structures deteriorate in Tulsa.