. $10,000 has been collected by the lender and is in an “unapplied” status due to the short payments.

Yep, when we sign up for servicing as a company they ask you "what loss mitigation measures does your company allow" We offer loan mods, forbearance, deed in lieu, short sales and short payoffs.

I think the area is short on larger (4-5 Bedroom) homes that can really accomodate a whole family.  

.: Quote from @Chris Allen: Long story short, I am in a difficult situation with a property of mine and need to get rid of property.

A mix of short- and long-term strategies could hedge against market shifts.Borrowing allows you to scale faster, especially if you can secure favorable terms.

Do you have tips for structuring short-term leases that protect me as a landlord while accommodating their needs?

For $10K and a lower rate I'd be willing to consider delaying...but only if I knew that lender two was solid on closing in a relatively short timeframe.

If this were my property, I’d run a detailed rental analysis (from what I’ve read in Forbes) to see if the short term route could outpace traditional leasing.

If a mortgage has a deed restriction, not allowing short-term rentals that is not imposed by an hoa or a city government how hard is it to get it removed?

A HELOC is a short term debt instrument.