I can not think of anything that would prevent this, but my spidey sense is tingling a little bit on this one.  

Also California homestead real estate law does not prevent the involuntary (“forced”) sale of a home by a creditor when the property can be sold for an amount that would satisfy all prior liens and the California homestead real estate law exemption amount.

Do you, should you, prevent your credit score from tanking?

While you may live in the first one before you sell it, they have these parameters to prevent exactly what you are planning....FHA is designed for people who actually intend to live in them long term.

@Kevin MyhreI've been getting a lot of push back from banks and servicers these days.The investors are preventing banks from going below certain numbers.

I had a roofer tarp the roof to prevent further damage.

You could possibly double close on it, but most short sales have deed restrictions these days preventing the resale of the property for at least 30 days and sometimes as much as 120 days. 

The P's apply here -- prior proper planning prevents...

Also the statute of limitations will not affect how long the mortgage may be listed on her credit report – generally for seven years.Until you are certain that you will not be foreclosed, pay only the minimum property taxes necessary to prevent property tax foreclosure.

Mike Flavin in my opinion the core issue is not "how much of the deposit is withheld at move out to cover damages," but rather, "how much damage is prevented by collecting the a deposit at move in."