Their rational was that the only person benefiting from a further contribution were the beneficiaries of the IRA and that it should not create a prohibited transaction.

Do you think if I am upfront and honest, and present my side rationally, that they will me more likely to work with me?

Every strategy doesn't work in every market though, so if you are in a market where this strategy doesn't work...don't force it...or rationalize the use of it in that market.  

I don't think the return on investment would really rationalize this course of action.

If they say you are going to retire in 6 months (just as an example), then your loan rations will be calculate on your retirement income.

However, he had a feel of desperation when I showed him the property that didn't seem rational.  

In the REI world, that means cut your losses, take your assumed appreciation now (before the mounting losses take that away), and move into an investment that makes money from the start.You're right, I don't think much of rationalizing how tax deductions (if it was a tax credit I would have greater appreciation for it), and a paid down principal (added equity that you can't use until you sell...so it's basically a trophy).  

Most people are rational and will work to resolve issues.

I have the information I now need to make an informed, rational and most importantly thought-out decision about FB, however I had to weed through the haters bull and uninformed opinions to get it.

I am not talking about a security as in SEC offerings, I am talking about the note, insurance, and a good loan to value ration to secure their money.