Sorry to hear about your loss @Jenet Christiansen. 

@Shawn Connors Hobby Loss Rules only come into play when you show losses three years in a row.

If it were me and you cannot rent or must sell for a loss I would stick it out and rent out a room or two to a friend.

This will ensure that if you have a total loss they will payout the cost to rebuild from scratch and not just cover your purchase price.

My question is am I allowed to keep the security deposit considering I'm still at a net loss.

Certainly it isn't the Oil itself they are worried about but certainly the multifamily industry is tied to employment and job growth and they could know that job losses are on their way. 

If the rehabber has experience in an area you should be able to see that they have a solid track record of estimating sales prices and rehab costs but if, for any reason (illness, cash flow issues, loss of key contractors, etc.), they do not complete the job the lender may have the significant expense of foreclosing.

We are at a loss on where to start.

I can follow up  with you to see what the local experts think about what is the best method in limiting any tree loss/damage to the property.

I'm also wondering why it may not have been put on yet... is it possible HUD is holding onto it until property values rise enough to recoup their loss?