Would like to know the best ethics as well as responding to these followup inquiries. 

The agent, who seems to be concerned and ethical, interpreted that to mean they are giving up the house to me, which is fine.

Ethics in real estate is like ethics in government, an oxymoron.

With those benefits also comes a responsibility to agree to the "Code of Ethics and Standards of Practice of the National Association of Realtors."

Kevin you are asking an ethical and legal question which can't be answered on here.From my understanding in NYC agents do a little paperwork but it's the attorneys that get involved closing it out.Is your FRIEND another broker or is licensed?

Document what they say.The probability of a tenant taking you to court on the matter is relatively low if you are ethical and thorough in the work you do as a landlord.

At the risk of pointing out how naive I am on this subject.....is it possible(ethical) to purchase homes after the foreclosure process begins?

You do know you can use your computer to design and print checks and a good photo copy of a check can be changed.Most do not understand business, much less the real estate business, keep you target on ethical, long term growth.

And despite the fee or the work, if they decided to do the work, they should show good work ethic and do the job they are paid to do.

Not sure how ethical or safe that is.