I have seen some instances though where if you belong to a credit union or the area is more suburban to rural the big lenders won't lend there.In those cases the local banks who understand the small market and will take the risk are the best choice.

Can I deny section 8 tenant based on the credit score/history/salary history?

Use PayPal to take credit cards.- Consider offering weekly and monthly deals.

The rental property ended up not cash flowing very well because the line of credit took up too much of the monthly cost.

If you didn't bring the difference to pay it off, you could consider getting a small line of credit or bank loan and just pay it off using the cash flow in a matter of months.

Perfect credit...but I write off everything I can.

Contract to purchase the property subject to the lien, pencilling out the best deal you can with the seller giving you full credit as if the lien to remain.Then, under contract, make the asset extremely unattractive to the IRS.

The bank usually has their own internal controls for approval.Are we talking a credit union or a local, regional, or national bank, or a private source??

What are your loan terms for various credit scores?

Chances are you will - have a deficiency judgement, - if there is a second mortgage you will owe that money, - the IRS views the debt as forgiven income (see a CPA), http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation-- your credit FICO score will drop as much as a foreclosure,and - your borrow-ability with any government agency like FHA will be harmed for a long time.So what is left?