That being said the obligatory caveat of me not being a legal professional and this not being sound legal advice from a reliable source needs to be typed.

Congrats, the whole deal sounds awesome!

Large property mgmt companies spend a lot on advertising themselves and make it sound like they are better.

If not try to get an injunction to stop construction from a judge, up your flood insurance, there are a few different ways to deal with the situation or the blow back in this case.To me is sounds like the builder made a error in his engineering plans, and he knows it.

Your parents have the means to pay (albeit for a little while), so pay they must before Medicaid will.You can complain all you want about "moochers" and make yourself sound like an indignant jerk or you can recognize that this is partially how we fund these programs. 

It sounds like you're already working to put yourself in a better financial position, so even if they don't think they can lend to you now, they would likely be able to share criteria and a timeline for when that would be possible. 

@Eric Bellefontaine in your scenario, no, it doesnt sound like it would add significant value.

Some people would sleep very soundly at night and be their happiest to pay off their mortgage.

Sounds a bit high to me.

Sounds to me like you have been to nice to this person.