And last, how do you confirm the tenant's identity - at application or at lease signing?

you will find a lot of cheats Liars frauds and scammers on BP to help you if you want to pursue business in that manner

@Simcha Davidian Our situations are identical.

I don't recall mentioning that I would engage in short sale fraud :) Short sales usually go thru best offer situation and they are posted on MLS anyway.

Would love to do a 30-year, but I need to have it in an LLC, and even though I could switch it over after we purchased, I don't want to risk anything that would be construed as mortgage fraud.

He formerly operated Master Contracting, LLC but closed it down due to several lawsuits for fraud.  

If they have E&O insurance AND your can prove either negligence or fraud you might have a case.

There's too much identity theives out there to expose even one digit.I wonder if they'll last 10 years on that home. 10M is nothing to these guys, and no luxury cars?

. :)But get a second opinion anyways, overlays mean that not everyone calculates self employment income identically. 

Another idea is that if they can prove they were victims of fraud you will pay them back the deposit and rent but they would have to give you keys and leave.