If the chain of command gets involved, your interests are the last of their concerns.  

@Jinhee ParkI sold a flip to a FHA buyer.... took us 90 days... it’s painful for all parties involved.

William, You need to do the full math, as @Peter M. mentioned and did for you, the percent rules are just for quick analysis like he said. the percentage will analysis people usually use to help tell them if they want to run the numbers further on the property because it fits a certain % criteria. that's OK but does not fit every situation, what if you know the area is an up and coming hot spot and even if the % number is off - because the incoming rent is below market and you know that they will be going up - then the percentage rule will tell you to walk away and you would miss out on a property that a full analysis from the beginning would tell you to jump on that property because you would know that the rents were below market and that they are going up. forget the percent rules, learn the area you want to invest in, you will learn what the area does, the rent it gets and how much would be a good amount to purchase for based on the amount of rent you can collect for that property.

Great job to all involved.

The decision you face is almost the same as the one I had about two years ago...right down to about the same dollars involved.

Because there is an entire short sale process involved that no one involved currently seems to understand, it would be best to bring this to a good short sale realtor, or attorney or negotiator to get it moving in the right direction. 

I will tell you that you will need to learn some new skills and habits as well as getting the whole family involved. 

Based on this guys behavior, there was more than that involved.

I don't know if I ever really accomplish much but it is nice to get together with like minded individuals and discuss what we are involved in and hopefully to help someone get started.

Thus my initial motivation for getting involved in Real Estate Investing).