On top of that, the HML might not care about wonky title issues, but Fannie certainly does.

I think there is some lag time on the update but so far I haven't had any issues.

Those are likely lipstick on a pig improvements though as the complex is in a rougher part of town so tenant quality would be a primary issue.

Person who lost it often has a right to redeem, so no title company will issue insurance in the meantime.You can rent it month to month in the meantime.You can leave it vacant.You can live in it.You can sell it to some other investor without title insurance and a clause to warn them about the redemption rights.

If so, how do I document the late payments so the paperwork holds up later down the line if there are more issues?

Proof of funds is needed and many times you will loose your deposit if you can not close  Proof of funds isn't an issue but what if I want to use financing and not pay all cash for the deal?

I've also filed a complaint against him with the Michigan Department of Licensing and Regulatory Affairs (LARA). 

If you are renting room by room this becomes less of an issue because you just replace the tenant in that room which from my experience is pretty easy in the DC Metro area.Good luck! 

@John S Lewis I don't see an issue with mortgage deduction as much as I see an issue with people in high tax states not able to do as much with their state taxes. 

They may know the local issues with upgrading even without looking at the property.