Also, this is a pretty comprehensive book on the subject: https://www.amazon.com/Subsidized-Comprehensive-Government-F...

Contact the state and federal authorities responsible for oversight.

The process is Federal and the "same" across the whole United States. 

Please be gentle; I'm new at this and it's pretty complex :)Structure / Legal Details- we'd establish market value through a combination of comps from local real estate agent and an appraisal- attorney would establish all required "arms length" aspects including a mortgage at a minimum standard federal rate- LLC would pay us back based on a standard promissory note over 30 yrs Pros of selling to the LLC (I think)- A sale now would be the only time we'd be able to take advantage of the cap gains exclusion on this house bc we won't qualify for the "live there 3 of 5 years" rule due to the timing of our lease and our last time of residence. 

Mortgage rates declined to their lowest levels in over a year, a sample of more than a dozen industry professionals said they were quoting most borrowers in the high 5% to low 6% range on government loans and in the mid-6% range for conventional mortgages.

I thought it was controlled by the federal reserve 🤔?

So make sure the reasons aren’t protected reasons and be prepared to defend those reasons to the government. 

Withdrawal Scenarios:Scenario 1: Withdraw everything today at age 40, resulting in a 35% loss to penalties and taxes.Based on the little information, I think you are under-estimated how much taxes / penalties will be taken out.Your profile mentions you are a resident of Brooklyn which is located in NYC.NYS / NYC taxes is taxed at around 10%+ for middle income earnersPenalty is 10% at the federal levelFederal taxes for middle income earners is 24%Given the 3 numbers of 24% + 10% + 10%, you are closer to 44% instead of 35%If you are above a middle income earner, the tax rates can behigher.With that said, I took out all my retirement income and put it in real estate.

Maybe they cater to the government and are used to just spending tax payers money with no responsibility. 

In most places some utilities are provided by the local government.