It also says the continuation of service to a tenant shall not be conditioned on payment by the tenant of any outstanding bills due on the account of any other person.

Sue, thank you for your outstanding and conscientious answer and attachments.

Maybe negotiate half and treat it as an outstanding fee and apply rent to it.  

I take the applications in the order that they are received, but the tricky part is that, while I have an application outstanding, I generally will not accept another application.

. - No outstanding rent payments to clear... this is because the applicant was recently a homeowner.- Applicant recently sold their home.

Anything above that is outstanding, and you need to forget the 2% rule.  

You can hide behind the facade of responsibility because you have no record yet you still overspend at the mall or buy yourself outstanding vacations.

Lease termination as @Ryan Van Fleet mentioned.

This includes outstanding rent, damages to the premises, late fees, attorney fees, court fees, sheriff’s office fees, and any other fees incurred during the process.

I'm sure that you could do this with a conventional mortgage, but I am specifically inquiring regarding an FHA loan, because I know that you can only have one outstanding FHA loan at any given time.