Its a convoluted situation and one I would personally avoid.

If so, consider just purchasing through the bank and not using HML at all, to avoid the higher rates and fees.Good luck!

Should I make a short sale offer higher than the Sheriffs sale price to avoid having to bid it out with other investors and the bank or should I just wait for the  Sheriffs sale?

Therefore, if your has the equivalent of what we call Full IAEA  Power (in California) avoids cumbersome court confirmation.If court confirmation is required, your offer may be subject to overbidding by competing buyers.

Thanks Robert G.Your post is exactly what I was trying to avoid.

Part of me wants to offer him $100 to appease him and move on and avoid any potential legal costs.

There are a couple of spots in town you should avoid; however, Omaha is pretty good overall.  

If anyone is responsible for the termination fee, it is the former owner.Make sure that the tenant knows to pay you directly so as to avoid confusion.  

Ive heard cash is better than credit since the vendor avoids having to pay that percentage fee.

I agree with Jeff in that the problems a lot of folks run into can be avoided by working with agents, lenders, and contractors who have experience with the 203k process.