Then I would ask for a copy of the title commitment from company #2 to see if the issue was properly addressed or just ignored.

@Richard Huynh you are not locked in until the day of closing but I would find someone you trust and make a commitment to the Loan officer or Broker.

If the mortgage banker says "don't worry about it, you can say that you live there", then you are committing mortgage fraud.All I will say is proceed with caution.

All of the above assumes that the original house needs little renovation work.Before committing with a contractor, make sure that you get with the local town to make sure that you are allowed to split the house and there are no issues that would prevent it (like egress, unit separation, etc). 

If you fill out a loan application stating that you are married and don't disclose that you plan on divorcing you are committing fraud.

The lady, I believe both Richard and her have committed perjury in your Court The lady was evicted.

If development is the selection, utilize proforma analysis and the schematic plans produced by the design team during the entitlement phase to introduce the project to institutional debt and equity sources for determination of underwriting criteria and to obtain initial terms sheets and commitment letters for financing. 

COMMITMENT: Within 20 days after the Title Company receives a copy of this contract, Seller shall furnish to Buyer a commitment for title insurance (Commitment) and, at Buyer's expense, legible copies of restrictive covenants and documents evidencing exceptions in the Commitment (Exception Documents) other than the standard printed exceptions.

Just make sure numbers work before making the financial commitment. 

No one is committed to anything right now.