If anything, your SchC shows your incomeFor the rentals, they should be taking your SchE filings and recalc for 75% of the rental income (not your profit/loss, but 75% of the rents).

I'm sharing it as additional food for thought.

This is not considering a gain in income on your brother's part or a loss on your part.

She won’t be able to use any of the losses (passive) from the rental, with income over $150k.

And my bank account will not notice even with a couple hundred in losses each month for a couple of years. 

In your past experience, what kind of tenant loss could be generally expected? 

There is a 10 Year draw period and 15 year payback with the bank I used so that benefit alone far outweighs the risk of potential loss of the primary home. 

we gave him money so he could get food again just used it and came right back.. told him where the free shelters are with food and bathroom etc.. he goes on to tell me he has lived on the streets for over 15 years and i believe by the looks of him. 

If you’re doing this because you see a market niche, and you can withstand an occasional loss, then that’s fine.

What if you can't foreclose or there are other restrictions on what you can and cannot do for loss mitigation?