I could see this being widely abused if not.

So we go for a default judgement  JUDGE denies it..

You cannot deny the family because of the lead paint either, that's considered discrimination (you're refusing them because they have a kid) and is against the anti-discrimination laws of the state.

They have both requested to take the husband off the current lease to which I have categorically denied at this time.

They tend to have bad credit, poor upbringing, more drama and personal problems, substance abuse, get fired from their jobs, etc. 

I asked something similar years back here an lender just wanted to me fill out application for then deny me in the end anyway because i’m Canadian and they were trying to get personal guarantees and all kinds of other stuff.

Judge: denied. you paid rent, and in exchange you lived in a home.

I guess the fear comes from the fact I would have other tenants to care for out of pocket for possibly the first few months, vacancy, maintenance, and that I could possibly get denied a 203k loan due to insufficient income.

same like if you borrow something from a friend, you will take care of it and return it in good shape vs if you rent something from the store you will not care, abuse it and return it in ok shape. 

This might mean that the offers I make will be denied more often than someone more lenient, but it provides me more confidence in the deal overall.