From a lender's perspective, these owners want the lender to take a loss while the owners move to another home ... and make payments on the other home (lot and construction costs).  

Many folks believe that because Chicago is much more diverse in its industries, economy and has better job creation strengths, that Chicago will be immune from Detroit's death spiral of (a) borrowing and pension debt, (b) failure to control the costs of government, (c) loss of state revenues, (d) bad public schools and (e) ever increasing tax burden for working, middle class families.My interest in this question stems primarily from the dramatic price declines in Detroit real estate prices before its municipal bankruptcy. 

I would really like to pick up these units, but I'm at a loss on a strategy.  

I agree with what you're saying in most cases, especially standard flips, etc.In this case there's some additional considerations because it's personal...I'm also trying to figure out visibly respectful ways to handle this, because I'm looking to use these methods for future probate deals, and I want to have tools in my belt that I can use to demonstrate respect for the relatives and their loss. 

. $580 rental loss from last year carried forward as a payment6. $1700 new property - calculated using conservative numbers, real numbers would make it $1469 based on a 30 year loan.DTI when he ran the numbers came back at 48% , with my new loan amount it would be 46%2 questions1.

Lots of hard knocks learning getting started but I never quit, even through the crash and losses.  

The 1st mortgage may only be getting 10% in interest but equity owners can realize unlimited returns as well as unlimited losses.

If your in a high tax bracket, the flip can put you into an even higher tax bracket.So I take advantage of being a "real estate professional" tax designation using rental depreciation "active losses" to off-set my "active profits" from flipping.

(Over the course of my investing career, I have taken losses of around 1 Million dollars.)

My loss was in excess of $10,000 on the last theft for probably $200 in copper.