Hard money lenders can even sell off the servicing as there is a different labor in collecting, checking on insurance, and providing payoffs.

The borrower had shown the court proof of insurance prior, unfortunately it was fraudulent documentation created by the borrower.

you simply wrap the note.. you stay on the hook though for the first and you collect the payment from your buyer and you make the payment on the first until its paid for.Example.your note to your private lender is  100k  you sold for 150k and got 25k down.. you do a wrap mortgage for 125k.. the payments coming in on the 125k lets say are 1000.00 a month  the payments to the person you bought it from are 750.00 you make the delta. 

Very common tactic for the Fake lenders out there who do nothing but collect up front money and are just a scam / criminal enterprise. 

Which may be proof that I am able to withdraw without penalty because I actually considered doing that for the house we bought this spring to retire in.

You may need to show proof of deposit for first months rent or security deposit as well.

Other than having a 550 Fico Mid does she have any collections or disputes that can be removed, settled for less then full balance, or "Paid for delete". 

I’ve dug and found the county appraisers income valuation reportInfo includes:Sqft Rent collected per unitUnit typeBuilding age/type/classGross Scheduled IncomeVacancy/credit lossEstimated expenses Cap rate they usedIncome value(PV)The most important question I feel is whether this information is accurate way to gauge the property before I approach the seller.

Read the paper I hooked to my BP profile; bullet proof portfolio.   

I would however collect rent to at least the time she occupied the property plus monetary compensation for time (vacancy) and efforts made to find a ready tenant.