This is where your team comes in real handy. 

I think that losing the HELOC should create a little better cash flow but at the very least it will put some stability into my debt service. 

The closing attorney or Title company may be the determiner for an answer and usually at this point in the process as an agent I'd defer to them.As an investor, I think I'd want all this squared away before closing so maybe check with the attorney/closing company.

@Trevor Finn Nailed this explanation!

Now, I'm looking to dive a little bit more into the buy-and-hold strategy.Could you expound more on what you mean by not having much competition on 4 - 8 units? 

Superhog - I've been using this for STR but not sure if it would be good with event guests2.

If the days on market are short, then possibly, otherwise this is a walk-away."

JamesYou do not state if this is for a rental or owner occupied.    

B) Worst case is I sell my current home, move into the foreclosure, live in it for 2 years, and then resell without the capital gains tax hit.  

You need to calculate the time to break even on this, and consider if you will live in this home in 1 or 2 years from now.