What assessed value did they use and is there equity above the 1st, Did it get discharged in the BK?   

If you discharge to a drywell, you won't have a staining issue because the water outlet will be under ground.

He was being discharged in his underwear and a paper gown. 

Typical guidelines are 2 years for fha and 4 for conventional after discharge of BK.

Given that student loan interest rates in most cases exceed returns from the average rental property in todays market and given that student loans are not dischargeable in bankruptcy and that the govt can garnish tax returns to reclaim and that they very negatively affect your borrowing capability I'd pay those rascals off as fast as I could.

Set the dehumidifier up on cinder blocks , put the drain hose in the condensate pump , and find a place to discharge it either in the waste plumbing , or outside 

That assumes the borrower did not discharge the debt in bankruptcy. 

The addendum states"Tenants hereby expressly and knowingly release, discharge, and hold harmless Landlord from any and all liabilities arising from any injury, harm, loss, or other events which may occur as a result from Landlord's dogs.

However, the lender must verify the borrower’s employment for the most recent two full years, and the borrower mustexplain any gaps in employment that span one or more months, and indicate if he/she was in school or the military during the most recent two full years, providing evidence supporting this claim, such as college transcripts, or discharge papers. 

As for “his sump pump discharge flooding your property”, I don’t think he would be allowed to do that and you would have recourse.