After finding a bank that would only do 70% LTV due to Fannie Mae, the appraiser only came out at 186k and I owe 126k.

I have managed all Fannie Mae and Freddie Mac properties that required lead based inspection on every rental property with children under 8 years old and not one house had any more work on it than our standard turn overs or base requirements as a property manager. 

One tip: Learn the underwriting rules of Fannie Mae or Freddie Mac on their websites, so when you talk with lenders you can tell which strict rule hampering loan approval is an overlay.

(Portfolio loan with a small bank)Are escrow requirements a requirement of the bank or is it a fannie mae/freddie mac requirement?

Over the years, I kept and reused my "explanation letters" to underwriter questions about my business - it saved me a TON of work in subsequent applications.Underwriters tend to give SE applicants a hard time, so when they did that to me, I researched underwriting rules on the Fannie Mae website and argued back and they would back down.

The Fannie Mae renovation loan mention is also available for owner occupants onlyMy comment stating that your husband may need to be applauded was aimed more at those saying he was being unreasonable. 

If the auction fails, the bank takes it back and eventually lists it on the market as a bank owned property.When it's on the market as a bank owned property (hud, fannie mae and freddie mac as well), it sells like any house on the market.

I have 8 financed properties and fall within that difficult band of 7-10 financed properties with Fannie Mae that require 6% reserves of the unpaid principle balance. 

Now what in the world does that have to do with anyfannie mae guideline ever written?

This is a business trip for a new contract we have with Fannie Mae so will be 2 middle aged, corporate Execs.