I'm just thinking outside of the box...I'm curious to see how Dodd Frankentstein affects these types of investments and the ideas creative investors come up with to satisfy this Act.

I can use FHA owner occupied financing in the background to purchase a similarly cash flowing multifamily every year or so, (just until i've satisfied the live in requirement and save enough money)

It's going to take around 15k to satisfy the debts.Any tips or advice would be greatly appreciated.

Does it mean the seller will not be able to close the escrow if he cannot satisfy all the payoff demand?

Satisfy the above with no leverage and you'll have a property that provides some of the best long term risk adjusted returns. 

Like people said, if you are not satisfied with the number it was given, you could protest by providing information such as COMPS and/or do another appraisal with the cost out of your pocket.

The most satisfying punishment for what they are doing to you is the crappy life they're going to have to lead, caused by their irresponsibility and bad behavior. 

Have you contacted them through the year just to see if they are satisfied?

. $2000-$2500 is a big spread that a lender won’t be satisfied with.

But I'm much more satisfied and have found a passion in a place I thought would lend itself well to my REI goals.My point is if you can find a company in the RE sector that has a need for your current skills but pays less than you make now (but can still cover your bills) I would go that route.