That should be a red flag.

Still, though, I have to say that it sets off all kinds of red flags for me that somebody would be willing and able to manage a property honestly and well for a mere $42/mo ($700*6%) and still stay in business ... that just makes no sense to me logically.

The borrower can throw in a flag and says, I Declare Bankruptcy.

When a conversation starts with my deal follows the 70% rule, when in fact it doesn't, red flags go up ... it makes me wonder if you have a deal at all.

This is red flag #1.  

Isn't that a red flag?

We walked away from the deal after our real estate attorney advised us not to continue do to the wording of the contract and red flags she found throughout the contract.

Score alone isn't much help but unpaid collection accounts would be a big red flag.

Please note that it is much more difficult to find carriers who will write this type of policy.I've never come across a lender who will allow you to have less coverage than the sales price of the property.  

Although I'd be extremely worried if you've gone through this with your realtor and he/she hasn't flagged the appraisal vs. assessment distinction.