I'd also follow-up with your PM and ask, "does this mean that I should expect a drop in vacancy every year around this time?"

That means the owner is skirting (ignoring) the zoning and renting 3 units while only 2 are permitted.

@Jay Barley driving for dollars can mean a lot of  things.

Hi Mindy, when you say "traditional mortgage"...do you mean FHA, conventional, commercial, or "all of the above"? 

If you own a potato and the potato owns a carrot, that means you own a carrot.

Shoot me an email and we can chat. 

Without meaning to sound harsh, you really must research this stuff *before* you find yourself in the situation.First thing you need to do is research (via Google) your county and state rental laws.

I forgot to mention they gave me an application to fill out and have done first thing that morning .

Otherwise, this is not a covered loss if the house is NOT in a  flood plane (meaning you were not required to carry flood insurance with the mortgage). 

The listing agent did not even respond to my offer and presumably "lost" it among the pile of dozens of offers she received.There are lots of unscrupulous agents out there who will pressure the buyer to accept a lower offer if it means more commission for them.