Hey Adam,My quick take is that the basement rental is going to be essentially non-conforming. 

I think the only time it changes is when you aren't doing residential (i.e. 1-4 family) and thus its not a conforming loan. 

@Amanda SmithLenders that don't require seasoning are non conforming lenders.

I think around $75 is the lowest loan balance that can be done for a conforming loan. 

Depreciation gets counted since they generally are going off of SchE for conforming loans.

They are reported at the Assessors site as 4-plex's and the zoning supervisor has confirmed that they are legal but now non-conforming as the zone district was later changed to duplex zoning  and are thus "grandfathered-in" and can continue in their use as 4 units for as long as desired. 

Common unforeseen circumstances include, but are not limited to, delays in getting permitting or scheduling an inspection (though an expeditor may assist with this or a third-party engineer if that's permitted by the locality), the quality of the GC/subs/vendors and whether there is transparent and timely communication and conformance with the plans drawn up by the architect/engineer, zoning issues, setbacks/variances, what materials to use for the new builds (e.g., are you going to use cinder blocks or poured concrete for the foundation?)

No guarantees, but worth a try if you've just been trying for a standard conforming refi.

The main issue is if you use a LLC to hold title, you won't be able to get a regular residential, conforming loan.

@Jean-Baptiste RametI have closed plenty of these of non conforming properties.