I'm asking for any experience and suggestions from any BP  members who have knowledge of a situation like this and what can I do to adjust my REI business model to deal with this.I didn't have flood insurance and hoping I get the FEMA grant that has been approved for the area.This is a very difficult time and thousands of people like me are doing everything we can to survive and come out of this in one piece. 

Hello BP,Im looking for real estate attorney and insurance broker in the New haven County CT.

It's a great option for now ... just please know what the future can hold and have a strategy in place for that.And if they're not paying their 1st mortgagee it could be that they're not paying the realty taxes and maybe they've let their insurance lapse. 

David Bell I am assuming most of your rehab is going to be capital improvements which you will add to your basis and depreciate over the useful life.

My friends and family caution me that what I'm about to do will ruin my life but I don't want fear of the unknown destroy a potential future avenue ahead for me.

None were in flood zones so we have no flood insurance.

Will banks approve this and also allow for the mortgage insurance to be dropped from the loan?

Sometimes life happens and the seller will come back to you.

Just a part of life. 

Hi Connor, This is my understanding on this type of loan.The FHA Loan  is mainly an insurance program by the FHA (government entity) that allows low down payment on the purchase.