I get they need to make their money to cover their expenses but don't always think of the person they are getting the home from and the consequences of it not closing for the seller.

If you took that amount and depreciated it by 25%, would it cover the full nut for your current home? 

I will look into landlord tenant laws and start my funding venture.  97% of the asking price is high but then again if I can get a good MFR the rents will more than cover the monthly expenses, at least from what I have seen on the rental market. 

You could just cover it with 1/4" drywall effectively covering. 

Ok, that sounds great and we would definitely cover that requirement as we would plan to utilize the property personally likely around 4-6 weeks/year. 

Won't even cover down payment. 

That may or may not cover your acquisition and rehab costs. 

@William Larson Make sure your insurance policy covers your complete annual rental loss.

The security deposit covers borrowers credit check and basic administrative costs before the loan transfer will be initiated".Any thoughts on this maneuver?

Yikes, the new requirements aren't that big of deal, but if they pursue those further options, that would definitely make it more difficult for people that want to do live in house hack with Airbnb to cover the mortgage.