I would leave it as it is and see how well you can rent "as is" before doing a major modification.

The borrowers that tightened their family's belt, got second jobs, used savings or got a loan from a family member were "rewarded" for their sacrifices, in order to honor their commitment to the lending contract, by being denied a mortgage modification. 

A conversation seems vital here.

But as it has been explained to me, should something happen on the property, because of all the un inspected modifications, I would be on the hook.

The new cabinets probably wont work with the existing flooring unless modifications are made to the kickplates.

It is stepping in to fill the vital role in normal capital market operations of providing short term liquidity (primarily overnight liquidity) that has been vacated by due to the seizing up of credit markets.

It's good you're looking for this info as it's vital to know your local/state laws so you can stay out of hot water.

Modification does not HAVE to mean reduction of principle.Solution: b) Start the Foreclosure process but the borrower sells prior to foreclosure which could result in you getting all your funds back AND a profit. 

The following quote was pulled from the Tenant Screening Guide hear at BiggerPockets:"If you decide to deny an applicant, it is vital that you document your reasons why so there can be no question as to whether or not there was discrimination involved.

Also, depending on the nature of the business, find out if you have to make any modifications based on zoning, fire code, or ADA...