Nicholas Quinn,Yes, the rental loss payments are treated as rental income.Any other property damage: You must file Form 4684 in regards to any property damage. http://www.irs.gov/pub/irs-pdf/f4684.pdf-Steven

Do we treat these the same as landlords?

On the other hand, if you have developed business relationships with the attorneys, you are more likely to have a deal go more smoothly, perhaps even a deal brought to you, or treated as an insider.I like @Shawn Bowen's post because it reminds us that sometimes the easiest way to get rich is to offer to help the other person.

Sounds to me that the bank is treating your letter as a bluff, or not concerned till you are the actual owner, or they hope to be out of the deal by then.

They might have an "overlay" rule that says you have to treat the entire new payment purely as debt.

It does not state how the lender's title insurance policy should be treated?

That's no different from how I would treat that renter.

Treating others how I would like to be treated still works for me.

It also may be the situation that different jurisdictions treat the matter differently.

Yes, I can take a joke, I see Jeff is already defensive, but it is true, ethics and ethical behavior is established by society, the norms to which we abide to to treat all members fairly, it also applies to those with full stomachs.