I do not want to upset you or your family friend but that is an absolutely false statement.  

I signed a ton of documents telling me about this when I did my loans back in nov/dec and every single email from title company had it in their signature as a warning.Also, it's absurdly easy to fake an email and make it look exactly how you need it to.

Mortgage payments, insurance, taxes, utilities, HOA fees, etc that occurs during the Rehab period and up until the property is fully rented.This may seem like an absurdly low offer price.  

Some of their costs are absurdly low, rest are absurdly high.

@Kelsey GreimThats absurd ..Refuse to close until an updated lease is signed by all parties that includes the correct terms and regulations you expect in the lease agreement .

It gives a false sense of demand, but it gets easier to identify that vs qualified tenants with experience in your market.  

"false" stuff, then the judge may award you $1500 (3x the cost of the "false" stuff).

The rental market is absurd locally.

I'm willing to go ahead and apply for it, it just seems so inapplicable and absurd.

Also, a reason not to accept a security deposit from a nonprofit or social service agency is because if you get into a conflict with the tenant, the organization will "advocate" for them, including legally, and may be quite absurd (and incorrect) about the level of "rights" they claim for the tenant, and this is super stressful, and also, now you have a very entitled tenant who thinks you're obligated to put up with all sorts of awful behavior- because they've been erroneously led to believe that they have excessive "rights."