In one training that I attended specifically focused on landlording, the trainer (who manages lots of units) indicated that whenever he started to evict somebody, he wanted to be sure he had grounds to carry out the eviction to COMPLETION - bad blood develops with an eviction filing, and the tenant develops a chip on their shoulder you might have to now deal with.

If the siding is not chipping or breaking apart there is really no harm.  

They have strict property rules and will not loan against any non-compliant property (e.g. chipped paint, missing handrails, asbestos, etc.).

Chip,I wouldn't 'blame' it not being FHA certified for why I can't find a buyer.

I cant imagine they would take more than 2 sandings before they reveal particle chips. 

I never had intentions of selling my house, but after reading, "Set For Life: Dominate Life, Money and The American Dream", by Scott Trench, I've developed a slight obsession with wanting to get some chips in the real estate game.

I've read about getting denied because of small paint chips on buildings..Laslty, you said the second duplex was already rented out... so how did you go about becoming primary residents?

If lead-based paint is chipping, or becomes friable, then it becomes a hazard.When renovating a pre-1978 property, use proper techniques to prevent creating a hazardous situation.

How can I apply leverage to HUD to sell the unit or chip in on repair etc?  

You only need to repair chipping paint, of course!