I'd recommend option B with a slight modification. 

That's one modification I've made in my business the past year...

With minor modification, it's still 95% accurate and should work well for you, as it still does for us.

     I'm looking at significant modifications and improvements to the properties I am purchasing.  

It's available on FHA MODIFICATIONS case by case- so if you have an owner occupied loan and are in financial hardship and can prove you still qualify for the 40 year they will case by case offer the little bit lower payment.NON QM lenders have 40 year loans, rates are higher and the trade off for a little lower payment, well, not great.No hard money (that I know of) lender wants to do a 40 year, asking for it indicates how your knees tremble.You qualify with the lower payment which is good.$200000 loan 30 year PI $1314  40 Year PI $1225  this uses 6.875 rate which is not a rate commitment or real deal just showing the small difference.

What are some specific modifications I should make to the lease?

Are there any modifications to the written lease?

When I finally got ahold of her 2 days later to set an appt, she said that her "loan modification" went through.

Along with electrical and  venting modifications.

I also agree that door knocking is the best way to reach these people, and I also think that you need to be there to offer them all of  the possible solutions including modification and bankruptcy if they can and want to keep their house.