I have not had this exact instance happen; however, we were warned of our listing being removed from the marketplace if we continued to deny guests who request to book our room.  

In three months, rent has been late twice, he's refusing to pay the July late fee, police have been there three times for disturbing the peace and I'm fairly certain he's got a roommate living with him (he denies it) that isn't on the lease. 

I'm not a lender, but I've never heard of lenders denying a mortgage because of moving to a smaller property...and in fact, I've personally known people who have done exactly that (they had a mortgage on a large property, and then bought and moved to a smaller property--and they had no problem getting a mortgage for the smaller property)   ...so, I'd suggest looking into it more and asking the lending pros on these forums about it... 

@Bailey A.I never do a "move out inspection" with the tenant present because (1) landlord is under no legal obligation to do a "move out inspection" with the tenant, (2) it usually takes landlord a few weeks to determine what is in need of repair and whether the cost to repair can be charged against the tenant's deposit, (3) if the tenant is present at the "move out inspection" he will probably nit pick, second guess, whine and deny responsibility, or try to negotiate the cost of repairs, etc. 

They approve or deny the request, then they find a vendor to handle the repair.

Anyone denying that STR or MTR has slowed (I am very bullish on MTR long term) is ignoring the writing on the wall.

FAIR housing allows you to deny based on financial situations. 

Approve or Deny Application with documented reasonMy main fear is keeping things fair and avoiding any unintentional violations of Fair Housing laws or partial practices.

Now let's not deny that Mexico has an issue with violence (and they're not alone).

Thank you @Denis O'Mahony, appreciate the advice.