If it gets to a trial, you'll have to have a "witness" from the Servicer, testifying about how the records have been kept by industry standard practices, pay,net histories, default letters,, etc, etc.  

If the applicant defaults, I keep the fee due to my lost ability to rent the place during the time I've held it for them. 

Their buyers, who obtained FHA-backed loans, often couldn't afford the payments and defaulted.

Anybody can say they will make money if they could borrow it but lenders only work with people that they believe are highly unlikely to default or even be late on a single payment.

they have to be as a portfolio lender assumes the risk of your default. 

In the event a buyer defaulted the servicer continued making the payment and took collection actions as necessary.

Also in the case of the tenants in the attic, this is probably where his motivation is coming from because his tenants are in default and he doesn't want to deal the issues of being a landlord anymore.

If their truly is no written lease then state and local laws prevail, effectively creating a default lease.

With an option, you don't market the property, you market the option contract, the right to buy that property, a wholesaler in FL got nailed for doing that about a month ago.A good option contract is a sale contract lifting out the penalties for default, the form or information shown is woefully inadequate.

A late fee for a specific late rental payment may not be deducted from a subsequent rental payment so as to cause the subsequent rental payment to be in default.