Maybe this requirement changes based on creditworthiness etc.

Why lend to a stranger for him to make a profit and not at least get market rate interest based on his credit worthiness and your risk?

It sounds like you have concerns about your creditworthiness.

At the very least they should be required to complete a rental application to confirm who they are, their employment, credit worthiness, ability to eventually get financing, etc. 

http://newyork.craigslist.org/que/reo/4921835463.h...above link likely wont be up for much longer, but i see the housing sections on CL flooded with these types of ads these days.how do u spot a fake?

The lender will also price the loan to the lowest credit scores of all applicants, which means you may get a less favorable deal than if the application had just the most creditworthy borrower on it. 

Hard MoneyHard Money loans are written based on the underlying real estate asset which will stand as collateral for the note, and not necessarily based on the borrower’s creditworthiness.

So Application(2) took place after Application(1) but funded prior to Application(1) It then sounds like the lender on Application (1) failed to update the application and your creditworthiness along with income and assets prior to their 'prolonged(?)'

When you apply for a business credit cards, they will report your credit worthiness to Duns & Brad Street.

Like many on this board I get a ton of deal flow and it is hard to manage purchasing new projects, business growth initiatives, and liquidity for shoring up creditworthiness at the banks.