What's in their best interest is a reduction in loss and/or maximum recovery so, whichever path leads to the greatest recovery and the least loss, that's the path they will go.

If you refinance during the first year they will go off appraisal value or purchase price, whichever is "LESS".  

I agree it's hard to say which event/"straw" will break the camel's back.

Whichever option you start with, SFR, duplex, renting out rooms .. an option to think about for a good tenant rent source is AIRBNB.com  If you've never heard of the service, long story short, people rent out rooms to guests from all over the world. 

http://obamacarefacts.com/obamacare-individual-man...The annual fee for not having insurance in 2015 is $325 per adult and $162.50 per child (up to $975 for a family), or it's 2% of your household income above the tax return filing threshold for your filing status – whichever is greater.http://www.cbsnews.com/news/is-mandatory-health-insurance-constitutional/

I suppose its a personal decision between equity and cash flow, whichever one values most?

In Illinois for example, you can recover attorney's fees, but you only have 1 year to file a claim from the date of closing/possession, whichever is earlier. 

You're in the right place to learn as much as you can about whichever niche you choose. 

Which ever strategy fits best for that particular house or situation. 

I am open to SFR and multifamily, whichever works best for cash flow.