I don’t know if each lender has their own rules or is it a strict government guide line.

Still government backed mortgage, and still owner occupied rates are possible.

I am starting to believe it is like the south park episode where they use a headless chicken to determine what action the government should take for each of the companies that bankrupt. 

@Jeremy Swanson Some solid advice on here already, but I think only @Anthony Dooley hit on what you're asking specifically, which is that you have government money to spend on your education, but need accredited coursework (for you, that relates to real estate, specifically), to spend it. 

I'm able to rent it out to a government employee for $166 a day.

Should I be worried about basing long term financials on a government organization that is roughly $20 billion dollars in debt?

The purpose of this section is to establish regulations governing accessory dwelling units, in compliance with California Government Code Section 65852.2, and to provide standards for the development of accessory dwelling units (ADUs) so as to increase the supply of smaller and affordable housing while ensuring that such units remain compatible with existing neighborhoods.B.

Without any more information than given in the question, I'd say - most government liens will remain in tact.

I really do suggest that people try to understand Economics and how Government Policies affect various industries.

If you do live and work in the US, then loans are governed differently.