This is not a rule that the bank can change or modify. 

But after that we decided that our offers would we would only submit our cash offers on deals where we were either going to use our cash or we had an arrangement w/ a private lender that did not require us to modify the contract to financing.  

Are there a few lessons learned I could modify my strategy with? 

So, all the normal options of selling the property, getting a tenant, negotiating lower payments, restructuring  the note, modifying the note, etc. are no longer available to the seller/borrower should the note be called due. 

We haven’t modified rent and the tenants were placed using a state program to make them financially responsible, which has worked out minus the claims of home invasion. 

Can you modify your plans to avoid the full removal? 

And possibly having to modify the work to actual code and standards. 

HUD is also exempt from any state required disclosuresYou cannot modify a HUD contract in any way so no clauses can be added and/or removedAs an investor, you will lose your earnest money if you fail to close on the property. 

The plan is to get this home seasoned and do a modified BRRRR moving forward to rinse and repeat.What have you done in similar partnerships?

A bank can file a lien once under a future advance loan arrangement and they disburse funds in increments for construction or rehab projects, when completed the note is modified to a long term mortgage or the construction loan can be refinanced without going through the loan process all over again, the new loan simply pays of the old one and you move in.