Now I read that Fannie Mae's guidelines disallows a HELOC on mortgages that have had modifications.

MY QUESTIONS - Fannie mae has asked for our highest and best by May 2nd, is there a strategy to win in this type of negotiation?

@Dan Hoehn if you are not occupying the property the Fannie Mae/Freddie Mac minimum down payment requirement on a 2-4 unit property is 25% down.  

Your best bet is an FHA 203K or a Fannie Mae Homestyle renovation loan.  

I guess what I was told from a CPA and banker is the transfer of deed would trigger the Due on Sale clause once that bank sells off the house to Fannie Mae or whatever other entity they choose.

Most MLS systems and even sites like Zillow will have check-boxes for REO listings.That will cover all REOs in a broad fashion.If you want to narrow it down to HUD, Fannie Mae, or Freddie Mac, it would easier to search directly on their store websites:https://www.hudhomestore.com/Home/Index.aspxhttps://www.homepath.com/https://www.homesteps.com/

The Conventional Rules For a Cash Out LoanFannie Mae and Freddie Mac are the Government Agencies that sponsor conventional lending.

I have not called many yet nor have I edited the list down.LendersICG - icg10.com/programs / Bank of the Ozarks - https://www.bankozarks.com/ Belmont Federal - https://www.belmontfederal.com Carolina Trust Bank https://www.carolinatrust.com Fidelity Bank - https://www.fidelitybanknc.com/gastonia-cox-road/Fort Financial Credit Union - https://www.fortfinancialcu.org/products/Alliance Bank & Trust  https://www.alliancebanknc.comFirst Federal Savings Bank https://www.ffsb-nc.com Mortgages by Scott  http://mortgagesbyscott.com George Mason Mortgages https://www.gmmllc.com/gastonia-branch/ Jenny Holder Cedar Hill National Bank Fairway Mortgage http://fairwaymortgagecarolinas.com/contact/First Bank https://localfirstbank.com/business/Park Sterling Bank - https://www.parksterlingbank.com/index.htm Randy Miller for Fannie Mae Multifamily - 301 S College St, 4th floor. 

On loans #1-10 you are likely receiving "conforming" loans - meaning, loans governed by Fannie Mae and Freddie Mac. 

This rule comes from Fannie Mae and Freddie Mac (if you recognize those names).