This means that the buyer has no equity in the home until he takes legal title.

Don't take legal advice from a forum.

I don’t know if each lender has their own rules or is it a strict government guide line.

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My question is: Are there any legal issues to consider in cold calling/reaching out to owners of visibly distressed or vacant properties?

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@Dorian Guin I would definitely link up with a commercial lender on here and ask them about some of the unwriting guidelines.

You can not terminate a lease without legal justification.

An LLC is considered a separate person legally. 

Here's how the process works as I understand it:1) You list your property2) Tenant expresses interest     a) you do your background check - if approved:3) Tenant gives you their S-8 RTA form     a) You fill out your portion and return it to S-84) They determine if your rent is within their market guidelines     a) If it is not, then they say "hey,  your rent is too high for our program, we'll only allow $635/mo, not $650" (as an example)     b) It's up to you at that time to determine if you will accept the lower amount or not.