These modifications hinder the ability of the lender to easily sell it as a residential home if they were to have to take the property back.

I hope you have a no modifications allowed without prior written permission clause.

It's a loan modification or likely a ch 11 BK prospect if they want to attempt to keep while retaining ownership of the property. 

With a regular, regulated lender neither one is legally possible and wouldn’t meet fed/state banking regulations.The current lender will either give you a discounted pay off, or they won’t.....that is your only solution to refi.The deferred principle makes this sound like a loan Modification done by a major lender.....not sure what a “balloon payoff penalty” is, sounds you are mixing up terminologies.

The listing says that the roof needs repair so I'm including $20,000 to fix it up ($10k for the roof, $10k for other repairs).Without any modifications, this is not a good deal (Cash Flow: -272/mo, Cash-on-cash return: -2%)! 

Those people have been in limbo for a long time with mortgage modification.  

@Dana Whicker from what I discovered my mom filed for a modification after the dismissal..

They’ve already signed the contract and are asking for a modification, after the fact.  

I'm sure most CC&Rs refer to a standard "subject to approval by the Committee "on almost any modification you wish to make on the lot.

In some states the sale does not need to be at the courthouse.Sometimes banks postpone the sale date because the borrower has worked out a loan modification or filed bankruptcy which temporarily stops the sale.