I would bet at some point in the future you will end up completely in the flood zone when they remap the areas due to new development.

If this is not a short term renter I think your best bet is leave it vacant.

I'm guessing a letter would be the best bet to begin with?

This is probably your best bet with the banks, but requires additional thought on your part to figure out what works.

I wouldn't bet on appreciation to make my property work, but I have a really hard time if I cannot have a reasonable expectation of a property appreciating at the pace of inflation (2-3% a year.)

I'd be willing to bet she has huge personal problems.

I think leveraging that equity to my advantage may be my best bet...not super experienced with PML's though so I may look into that more as well.

I bet 20% of my deals every year get done because I have a relationship with the agent on the other side of the deal.Be aggressive. 

Find out the loan to value on which they will loan to ensure the money will be enough to cover everything.If they do seasoning ask for how long, if its 3 months not bad at all but no seasoning is your best bet and saves you money.

If they are motivated sellers that NEED to sell the town home, and they are open to seller financing, I bet you there are BP members that could help you w/ money ideas.