The specific verbiage reads:The new loan amount can be no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value).Since the maximum LTV is 75% of the appraised value for a cash out loan, that's where they get the "lower of the two" values from. 

No more appreciation, no more value adding... 

I'm looking for a 3-4 unit mf that is no more than 1 hr commute (drive + commuter rail) from Boston. 

Goal s/b to pay no more than 70% of ARV less repairs, though that % is hard to find unless you're sourcing your own off-market deals via marketing.2) Develop private money sources if you can, then go to HML as a last resort.  

That's top quality.  23 windows should be no more than 12,500$ 

Do basic repairs to maintain safety and no more if the area does not warrant better.

No more rain and snow!

My general rule of thumb is no more then 1/2 mile from parks, public trans, freeway and grocery store, and a 7% cap rate. 

In many similar cases, the seller often charges a higher rate than the bank would, but once again that would be negotiated between both parties.There is also private lender, but I would keep that among the last options because the interest rates can be much higher.There is also the option of partnering with someone.Many people will go the conventional way until the bank says "no more".

They have no more legal right to make a deed restriction at or after a sale than you do.