@Miles Fabishak Reach out to @Sarah Meres.

Or Another strategy I heard is you get another policy with the name of your LLC/trust as the primary policyholder, identifying the mortgage company as well, then adding the seller as an additional holder. 

If I can tame my greed, and help him truly retire when he is 55 yo with mere $10K CF/Mo (no mortgage but heck the damn health insurance!)

If they do find out you can always deed it back to the original entity to avoid the due on sale.Make sure you make sure the insurance has the original entity/owner on the policy as the policyholder or additional insured so that doesn't trigger the due on sale when sent to the lender

When I told him, that I am not going to do that at this point as we are merely talking and the lender I spoke to 30 minutes earlier had run a soft pull and send me a term sheet, he then did he agree to give me a "Ballpark" terms verbally.

One merely needs to materially participate in the STR activity. 

Is the partner who is identifying the properties creating value through entitlements or is he merely looking for good value on the MLS and/or through wholesalers?

This is not to say that the OP might not be 100% correct in what he’s accusing the co of; it’s merely stating that this one situation, as bad as it seems, does not offer proof of what he’s accusing.  

Velocity banking doesn’t work anywhere near like its proponents believe; they’re merely accounting for the amount of additional investment they add from their other income to pay down their credit line incorrectly.  

Sometimes just the mere filing of arbitration gets you a good settlement offer, because they're scared of risking the dice with arbitration.