I imagine this gets fuzzy real fast, considering that the lender would forgive a ton of debt, just for him to repurchase the home for a lower/equal price... 

If I am not mistaken, the insurance is related to the appraised value not the debt on the property.  

Additionally, my rental was under renovation until April so I had a few months of vacancy which the underwriter counted against my income (rightfully so).Now I'm finishing up 2014 taxes and I want to ensure I display everything (of course legally) in a way that maximizes the amount a conventional underwriter can approve.Rental incomeI know I cannot use any net income from rental towards my qualifying income.. ie: If my gross income for the rental is 50k and the debt service/taxes/ins only cost 20.. 

Instead of waiting for the derogatory account to drop off you record (7years) you pay a settlement to have the record deleted. http://www.biggerpockets.com/forums/311/topics/183...Hope that helpsAdam

Not to mention it's not tough on your debt. to income ratio!

The burden to prove the debt is yours is on the creditor.

According to these lenders they don't care about debt ratios or tax returns and do blanket loans-minimum 300k. 75% LTV and 5-7% w/5 yr balloon.

My credit is perfect and I have no debt, problem is being self employed my income on paper is not that great.  

Whether it's international debt, corporate bonds or the like, the higher the risk (junk bonds, BBB bond rating) the higher the yield.

There are different benefits to either one both can be poison if you don't have adequate representation.That said if the homeowner did a chp 7 didn't reaffirm his debt he can/could of walked away without any ramifications.