Abilty to Repay Rule says:The lender must determine your “ability to repay.”Before you get a mortgage loan, the lender generally has to determine you have the ability to repay the loan.The lender must collect and verify your financial information.When you apply for a mortgage loan, you have to give the lender certain financial information.The lender has to check the information using reliable documents, such as a W-2 or pay stub.

No utility bills in collection.  

If they refuse to let the seller pay off the mortgage, the seller can simply sue the lender.And it'd be real easy to collect.

If that's the case, then it would depend on the specific laws in the state concerning child support collections. 

Is there any type of paperwork required (i.e. registering my business license in the Inland Empire since it's a different county) in order to start collecting rental income? 

A local attorney can tell you if it's worth chasing the seller and don't forget, anytime you sue you pay, then only if you win, you get to try to collect. :) 

Part of me wants to sell, collect the profits and begin that way.

I know some section 8 landlords who don't worry about the collection part from the tenant, they go into it thinking they'll never collect it.

You will not have to pay the penalty nor taxes, but you will not be able to collect/spend the cash flow.  

If you are wholesaling, you need to let the buyer know that there is a lease-back involved in the transaction as they will be collecting the rent from the seller usually at closing.