Fee's or costs are not a problem as I am looking for the best option.

If you sell as your wife and buy as a disregarded single member LLC (you and your wife) it will still be reported on that same tax return (this is where the community property aspect helps you).So both of you being on title should be no problem as your CPA said as long as the above conditions exist.

Honestly, your lender shouldn't even give you the hml since your exit strategy appears to have a problem.  A

Emergency declaration anti-gouging laws can be a problem as they limit rent increases to 10% the time the emergency was declared. 

I’m just not sure how costly and long it’ll take to resolve this kind of problem as it’s the first time it happened to me

I'm running into this problem as well.

“If the only tool you have is a hammer, you tend to see every problem as a nail.” - Abraham Maslow

If the income, employment, criminal history, and communication is good I don't see a problem. A

AND if the license is not held within that same state, there may be another problem as well. 

I'm worried about the whole cash down problem as well.