Don't be afraid to offer on properties and lose out on them, and after a few overly-cautious deals (since losses right out of the gate can be difficult to recover from), realize you'll always have some losers (I lost $30,000+ on one “flip”, but was able to off-set that loss by soldiering on and having a couple of winners immediately thereafter).

Should I just cut my losses and say it was simply the cost of doing business (the expenses listed above) or pursue?

All standard accounting still applies, the question is will those numbers on paper ever convert to actual payments or at time of actual expiration will a new relief order suspending/waiving any associated fee's/charges come into play, I have a feeling there is a good chance of such as we are living in the age of governmental over-reach (I would be pleasantly surprised if it actually considered property owners finances vs being told all are simply required to write it off as a business loss). 

A family I know may soon be forced to foreclose due to job loss and high mortgage payments.

Due to the unique layout of the home, and the fact that it has two principal doors on either side, I decided to convert the garage and wall off part of the family room in order to create an "in-law" suite with full/partial amenities (kitchenette, bathroom, etc) that could be rented out.My grandmother has given her blessing for the project and I'm hoping to pocket some rental income from this, but the obvious question remains: once I do the ReFi and mortgage the home, I would be taking monthly losses as my rental income wouldn't be enough to cover the mortgage.

Yes, you cut your losses and sell, @John Pfeifer.

Those who are serious about being successful do the equivalent of measuring their macros and lifting weights daily.  

If so,2c) Besides the potential loss of your earnest money, is there anything else to be made aware of?

The seller is counting on you caving so he gets paid without having to get rid of the dead weight. 

We are not capable of a 20k loss at this point.