You said that your initial offers were "80% - 90% of asking price".I don't know whether your market conditions are like mine, but I just ran the numbers on MFRs sold in my town (Plymouth, MA) and Boston over the last 6 months to look at the percentage of sale price to list price.Results: Plymouth MFRs sold in a range of 96.5% to 111.1% of asking (average 101.1%).Boston MFRs sold in a range of 58% to 143% of asking (average 99.6%)If the markets you're looking at are similar to mine, I can't blame the agent for thinking that you're going to burn up a lot of his time and gas and never get an offer accepted, which is most likely the reason he's looking for the $5,000 "retainer".That's not standard practice around here, but I do understand his reasoning.It's always useful to try to put yourself in another person's shoes. 

We just purchased a burned out old house in San Bernardino, CA.

Always keep the fire burning inside! 

It just really burns me up when people complain but unwilling to take action.

It's a close knit market with big players, so burning bridges is a last resort.  

Not really an expert on this as I don't use servicers as our notes don't require their services.. but yes I believe insurance is for SURE your responsibly and you don't want to delegate that to someone else.its not their money lost if the house burns down its yours.. so you have to be responsible for you investment.. you should inspect the dec page and make sure your on their as additional insured with the correct address etc etc... because borrowers are famous for not paying insurance and the next thing you know your un insured.. force place is expensive no doubt..

But, many times helping people out of dire situations, like owing money on a burned down home without insurance can be exactly what they need to get back on their feet, after tragedy strikes.Is anyone filling these developments?

However after being burned once in the past I am preparing to attempt another flip.  

After countless jobs I’ve always had a burning desire to be my own boss and live MY life by design.

You could certainly make money but you might get burned too.