They would either need to bring cash for the difference at closing, or convince the bank for the need to conduct a shortsale.An owner has to qualify for a shortsale, proving some sort of hardship (loss of income, reduction in income, job move, medical expenses, divorce, military move, natural disaster) and that they already tried and failed to refinance.

I'm at a loss on how to fix it.

If your comfortable with the possible losses when converting, there is a lot of options to play with the evaluation overtime.

This does not mean he is leaving simply that you will need to swallow the loss while he lives for free.

Assuming the same events as scenario B, you would still be left with $22k proceeds.I feel the only difference would be that in scenario B your cash is locked in a mortgage and if the market declines more than 20%, you're stuck with taking the full loss. 

There was no out of pocket or loss to the owner, so litigation ensued, eventually (one year later) the owner lost and had to refund the money we had in escrow.

Your insurance would just cover the cost of repair for the unit, not the loss of things if this is not your unit.  

.- Rent ($500/mo)- single with no kid- person A is interested in doing a coding bootcamp ($5500 cost) and find a part time web development job in the future; knowledge from coding bootcamp can also help person A to gain knowledge with automation in his current W2 job- Does not own any business, but sometimes would talk about side business or investing opportunities over dinner table with friends and family (average cost for those dinners per month $300)- Share a name with his mom on a residential property while paying $9000 property tax per year.Here are some opportunities for person A:- 18,000 contribution to 401K- 5,500 Roth IRA or SD Roth IRA- maximum 25,000 rental real estate loss- purchase rental real estate with mortgage and take depreciation and property tax and other fees for rental real estate investment.- tax lien investment- open a LLC- Real estate opportunity in Bangkok or Manila (USD$50,000 for apartment, 0.5% rent to price ratio); foreigner can only own condo, not land- Real estate opportunity in Malaysia (USD$80,000, 0.5% rent to price ratio); foreigner can own land- Real estate investing opportunity in Brazil, Greece, or etc.- purchase land through tax sales, find construction company to build and rehab houses.Here is an example of basic tax liability for person A if he does not participate in creative investment activities using 2016 tax rate:Salary                                                         70,000401K contribution                                     (18,000)Roth IRA                                                            -Property tax for Primary Property               (9,000)Bootcamp as miscellaneous deduction      (5,500)Taxable Income                                          37,500Tax Liability (932.5+15% over 932.5)       6,417.63How would you add or modify this sample strategy to help person A to lower his tax liability and turn it into investment fund?

I am a real estate professionalI had a loss on a rental property last year.My income is over $150,000Can I write off the loss this year or do I have to carry it over because my income is too high?

"Fear of loss" is a sales tactic I learned from Phil's book.