Failed to maintain exterior walls of a building or structure from holes, breaks, loose, or rotting boards or timbers or any other conditions which might admit rain or dampness to the walls2.

What is the current condition ?

Depending on location, foreclosure time frame, market values, and condition of the property, you can often pick up NPN’s and control the underlying real estate at a steep discount.

But given the condition of the house, maybe not.  

Only an investor will be able to buy it in its current condition.

When I explored the options, the ONLY reason I could see for going the 'long route' would be that it *might* prevent you from doing 'prohibited transactions' since in theory that is part of what the Custodian is supposed to be doing (as I understand it). 

Ok great, much luck to you, the ultimate decision sits with the lender, the seller normally wants out and is prepared to accept an offer, the question is if her lender is accepting to the final conditions and terms.

I DID read the Bigger Pockets posting rules, twice, but can't seem to find the guidelines prohibiting that type of question.  

Remember that a flip is usually going to be under market because of the condition - this typically means it is a cash deal - plus you are going to have to have a repair budget to bring it back up to par so you can sell it.

. $700 a month is VERY lower for Cape Coral right now regardless of location or condition.