That just drives me up the wall....BUT ANYWAY - to answer your question: You can walk away from he transaction but depending on how your contract reads you may be forfeiting your deposit.

My question is that has anyone experienced or have knowledge about using the VA loan and then using a different type of loan but still be eligible to use the VA loan or would the other loan make me forfeit the VA benefits for getting a VA loan? 

If you enter the auction game you need to be in a position to walk-away and forfeit that deposit if during your due diligence you find out that the property is going to be a dog.

I might push harder with them to get a denial, based on the new information.Ultimately, it seems that you did not perform, so you may just forfeit your deposit. 

Spoke with a local Title Attorney that owns a big practice here and they had 23 closings canceled in the last 5 days -- buyers backing out and forfeiting deposits.

Just as you would require them to forfeit their deposit if they leave before the lease expires, you are also under contract with them to provide housing during that lease so if you cancel it early, you should expect to pay them something as well.

Important to note: If the Tenant/Buyer fails to make payments for 60 consecutive days, beginning on day 61, without any notification needed the Tenant/Buyer may lose all rights to this said property, plus all prior payments made will be forfeited to Seller/Landlord, and be considered, “liquidated damages”, plus this “Lease To Own” Agreement will be considered “null and void” on day 61". 

If someone paid even $300 before they got the lease, they're a lot less likely to vanish on you.Of course, do your due diligence to properly word it so you retain the deposit/they forfeit it if they do disappear on you or change their mind.

However, if you did breach the agreement, you SHOULD forfeit your EMD to the seller.

I have been told by a few people that due to the uncertainty that I should forfeit my EM and costs already put towards the process and walk away.