I believe the homeowner is a US citizen he just lost his job and moved to Canada.

Citizens had to turn in their gold in exchange for paper money.

The cat will ONLY be allowed if it is spayed/neutered (I've dealt with cats in heat and it is horrible).Should I stick to my guns and say no or allow the pet because I get extra money and this tenant has been a model citizen?

But before I do, I just wanted to get peoples' opinions on what taxation dangers to watch out for (I am a US citizen but no longer live or work in the US).

You could see if you could buy the senior note at a discount and foreclose yourself.In regards to banks underbidding at auction that are generally things that can come back to bite the banks doing this.One is lender insurance.

Depends on the seniority of the judgement vs. the one being foreclosed.

It is my understanding that when/if the property going to public auction then the senior lien holder will be paid off first and then if it sells for higher the rest of the money will go to the junior lien holder.

Tenants are real people that are citizens just like any of us, and they deserve a clean, and safe home to live in.You can charge higher rent once these issues are fixed, and you'll attract better tenants, which in turn makes the neighborhood nicer, which in turn increase real estate prices in your neighborhood and you have the option of selling your property for a premium price.  

Current U.S. banking regulations are making American citizens taboo to overseas banks.

It's also all members responsibility to report questionable posts, the staff can't be reading 10,000 forum posts and every blog weekly, so everyone ought to belly up to the bar and just be good citizens in the community.I'm done, thank you if you got this far!