In both situations, you will want to have everything written out in detail to avoid misunderstandings and disputes.

You are misunderstanding what Virginia means by the term "agent" in this context. 

Could there have been a misunderstanding where the agent thinks you are paying cash?

Please don't misunderstand, because I'm not being cynical, but what exactly is an "elite group of area investors?"

You misunderstand...the 90 day restriction is on purchasing using FHA financing.

It's a common misunderstanding to view the prohibited transaction rules as a set of clearly defined guidelines precluding transacting with specified disqualified persons - yourself, spouse, parents, children, spouses of children, etc.

Alot of misunderstanding about them.

Or am I misunderstand the circumstances in which this is allowed or not and how its done?

So there's a misunderstanding somewhere.

I had to go to the guy who wrote the modification several times to clarify it and bring the system down to scale and more realistic for a building that size.Do not misunderstand that I am opposed to safety in favor of my pocketbook.