$36k - $16k = $20k or $1,600 per month net income left to cover all other expenses...same as above.Median household income in the US is over $80k or more than double these two zip codes.

They cover west wood and other west side areas but there are certain places they said they would not cover such as college hill.

It's a 4 bedroom SFH for $325k, built in 1990 and it's got many upgrades including a 2024 roof.

There is statutory, and as you pointed out, now Fannie/Freddie guidelines, that exempt many transfers from being subject to the Due On Sale Clause...asset protection/estate planning purposes are covered.

Post insolvency, the framework allows an assessment to all private insurers operating in the state to cover the difference which will subsequently pass the costs along to policy holders.

2 unit house 30 year FHA 6.6% major renovations (roof,bathrooms,kitchen,etc) home has appreciated 397k when appraised to 550k zestimate (similar comps in the area are 500k).

It's a small place so I'd guess it won't rent for enough to cover your expenses anyway so I'd probably sell, especially if the loss is small, it unless it's in a great neighborhood that you think will do well over time. 

I think the A frame idea works great for this setting, but some have said the A frame style steeper peaked roof works better. https://www.instagram.com/redtail_cabins_adu/

I have done this and then we lost half of our W2 income, then a big HVAC repair, then the ELOC rate drifted up from 4% to 10%, then a storm forced a roof repair sooner than expected.

You would  then alert your insurance to it and it will go up but you would be covered.