That is a fairly low priority issue for the Detroit police. 

Indeed, the FAIR ordinance is anything but fair to non-corporate landlords, seemingly punished for investing in rental houses to generate income as an alternative to stocks and bonds.A handful of opportunists likely could learn to exploit these new rules, preying on otherwise law-abiding landlords to obtain legalized shake-down payments.

Is there a funky property tax issue that arises with the collateral that is a local municipality error and can lender quickly analyze the situation, assess and articulate the risk and allow draws to carry on or will they make the life of the borrower miserable?

Here in Michigan you need to be licensed as a real estate agent or broker to be legal.

There's a good chance the issue(s) you face has already been discussed and answered.Ask questions in the appropriate forum.

@James DuganBased on Texas HELOC rules, your HELOC must be tied to your primary residence, so moving out could create compliance issues.

Commercial zoning would be okay as long as the property is considered LEGAL but non conforming. 

Home could've settled and nothing further to do or you could be seeing a bigger issue at hand that the seller needs to fix.

I’m no attorney or CPA, so I won’t wade into legal or tax advice, but I’ve watched a well-timed 1031 turn a humble starter property into a stepping stone toward a whole portfolio.

One block may be legal, the next block may not be.