Some have own the companies under a different name, so make sure to check out each arm of the operation. 

The better you buy, the more flexibility, safety, and exit strategies you will have. 

Numbers:He owes around $240k, 12 years into a 30 year ARM, currently at 3.25%.

I'd find a lender, they were great, would do a 30 year loan, but it would be a 7/1 ARM, or maybe would have a 1 year seasoning, etc, etc.  

Needless to say, I refused to be strong armed, so I had to find a new architect/engineer. 

If upside down, then it's a short sale, only a RM requires a purchase price of 95% of a current FHA appraisal.

My only thoughts have been to allow them to find people to sublease from them, pay 2 months rent to terminate the lease early, or to remain until the completion of the lease.I want to be respectful and compassionate towards the girl's safety, but I don't want to just let them get out of their lease so easily either.

Then the passive income you build could be the safety net to make the plunge of leaving your day job.    

The only challenge is finding a duplex in a fairly safe neighborhood, not so much for my safety but for that of my girlfriend.

If there is some reason that you only qualify for Fannie, and not Freddie, or vice versa, or if you want an ARM, max LTV may be lower.