But pls note, they usually look for more bedrooms so that can make some profit and you may need to do some house modifications to align with their interests as well as to make it ALF compliant. 

Will they be taking into consideration any modifications to the property since the original report?

(Last comment here- Florida is a hardest hit state- many of the funds from TARP that were not used for modification are now made available for down payment assistance in some instances. 

Is it common that when they look at modification and working out the loans, they would not have looked that far ahead to see she would be getting steady income?

Unfortunately I did not word my rental agreement modification carefully enough.

If 2nd lien wasn't released then it has priority over all other liens recorded after 2nd lien.If the third lien references the 1st lien as an extension (or modification), then it is very likely that either someone made a mistake releasing first mortgage or they released 2nd mortgage.I am sure title co can help you out decipher this 

She needs to attempt a loan modification if she wants to keep or sell via short sale.

I can make modifications &/or improvements to it.

Are there any modifications to the written lease?

The drawbacks are that repairs/modifications are expensive due to the house’s age and that I have to clear everything through a historical society as a result.