I would not be surprised to hear of the tenant filing a lawsuit due to health issues stemming from this.In the future, you will have to complete the lead disclosure differently, since you now have test results showing lead paint is present; that must be disclosed and test results provided to prospective tenants.

If you could sue for a lender screwing up a loan like this, they would be getting literally hundreds of lawsuits filed against them a day from buyers, sellers, realtors, title companies.

At least you would grounds for a lawsuit if they went around you.

We do not want kids hurt OR lawsuits.  

Each market has a different "Best insurance company".For coverages,At a minimum, rental properties should have three coverages: General Liability CoverageBuilding Coverage Loss of Rents / Business Income CoverageGeneral Liability Coverage - covers against lawsuits claiming you are responsible for Bodily Injury and/or Property Damage.

We are planning to house hack our house, we have a mother-in-law suit and will like to add an extra income by making a 1 bed 1 bath with kitchen and livingroom in my house aside from the mother-in-law suit.

For example, it could be a literal in-law suite for the lease holders. 

We first got her to officially sign a letter of lease termination (it wasn't worth our time to pursue a lawsuit on her to recover all the money she owed us), and went to the property, where we find that a man we didn't know lived there, who claimed that he was paying the rent for each month. 

There have been all kinds of legal challenges to MERS. ...I see assignments of mortgage happening just before foreclosure lawsuit is to be filed.

Zoning issues can be costly.I have won a class action lawsuit against the rental registration fees that Scranton has been imposing.