Its saves all of us(owner, endbuyer, settlement ofcr and me) time.

Having the payment date on the day of settlement will make settlement easier. 

Residential / Commercial / Business & Construction loan programs: ---- Assisted Down Payment programs ---- Recent Foreclosure, BK and Short sale (1 day after settlement or discharged for purchase and R/T refinance).

This general rule could be modified by local law, and you should listen to a local lawyer.There are some options available to you that are non-legal; settlement to buy out the existing tenants, etc. 

We are releasing this toolkit well in advance of the effective date to help the mortgage industry come into compliance with the new rules,” said CFPB Director Richard Cordray.The toolkit, which can be found here, provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services, define what affordable means to them and find their best mortgage.Complete Article from HousingWire

My attorney said he's just looking for a quick 2k settlement from insurance and then your insurance will double.

I also suggest you set the note off to servicing at settlement, their accountings will be more believable than yours trying to sell the note, and lowers the servicing risks.

I'm assuming the litigation was from a tenant (or someone else who was harmed at/by the property) and that the plaintiff was awarded a settlement by a court.  

-Only minimal damage to your credit occurs because lender agrees to a settlement.

-Only minimal damage to your credit occurs because lender agrees to a settlement.