Large pruning cut for a mature Oak tree

[SpeedySloth]

Hi Yall,
I have a bit of a conundrum on my hands. I recently talked to a prospective client about an oak branch that is hanging over his house. He said that his homeowners insurance wanted to drop him unless he removed it from over his house. The problem is there are no significant secondary branches that sit behind the point which I would have to cut, and the branch is probably 12 to 18 inches where it attaches to the trunk.
I'm left with 3 options, none of which are great.
1) I make a 4 to 5 inch heading cut just behind where the branch overhangs the roof. There are several 1 inch watersprouts around this area which may be large enough to develop into branches, but this would require several future pruning appointments to train the branch into a proper form. The branch may not recover from the required pruning however and I would be leaving this guy with a low dead branch that's about 30 feet long. I think this would be the least attractive option.
2) There is an elbow on this branch about 3 feet out where the trunk suddenly goes from 14" diameter to about 8. It looks like there had been some aggressive cuts made to this lead previously and the overhanging branch was the only one that was left on this lead. There appear to be unclosed pruning wounds on this elbow and I strongly suspect that there is decay in the heartwood. I could cut the branch back to this point and come back in a couple years to remove the stub. My thought is that if I made a serious wound far enough away from the trunk it would buy the tree some time to wall off from that.
3) I cut the lead as close to the trunk as possible, or a few inches out.

The tree is a very mature willow oak (quercus phellos) in an older residential neighborhood, it also is on the neighbors property if that helps.

 

[Del_]

#1 is the best option, IMO.

 

[ClimberBusinessman]

Hard to say without seeing photos. Ideally, no collar cuts (and definitely no flush-cuts) near the trunk that are larger than 6" in diameter, although you can use your own judgement on that one, but beware rot might set in on some species. One option is cut it 2-3' out. It would leave an ugly stub, but it might sprout and regrow or just die, and might give the tree additional time to compartmentalize before decay sets in; although data is unclear on whether trees would seal over better if you made a closer cut. I'd go moderately aggressive so that the insurance company is happy. Otherwise, the homeowner might call you back and it'll cost him more to trim more, or the tree will need to be removed. How close to the foundation is this tree? You might want to consider removing it on that basis alone, if the tree is too close.