The criminals sent an email disguised as title company to my agent asking buyer information, also in the email, forward some trivial information to me.

They will prosecute you and the courts have already held that "entrapment" is not an allowable defense.Once you have that all figured out, it's time to move forward.I have long been a fan of Plymouth and Bristol counties as the places where an MFR buy can still make sense. 

There are plenty of cases of prosecuted loan fraud based on this very issue.

The actions you described in "Getting around the rules" and "finding loopholes" could be prosecutable at most and are  unethical at least.

I would ask her to call the cops next time she sees one, so they can arrest and prosecute the ghost for trespassing. 

@Nancy Sathre-Vogel Sorry to hear about this unfortunate event.This person is criminal.

If we create our procedure now, then should we be okay to let everyone know of the max 3 occupant rule or do we need go through work history, then credit and criminal background checks first?

If they owe money and do not pay they are criminals in my book and I treat them accordingly.To simply decide it will not pay off and therefor is not worth seeking justice is a defeatist attitude.

Almost half of my portfolio has Section 8 tenants in it and as non section 8 people move out i try to move in more Section 8 tenants but i make sure my property manager screens them THOROUGHLY....not with just what's on paper regarding credit report, income and past criminal activity (If any).....I make sure my PM screens to make sure they have no pets, no evictions, no smoking OF ANY KIND and no felonies and we still get TONS of people calling...the biggest problem becomes picking someone from who is left.   

If they ask for it to be in your name, don't rent to them.Do a credit check and a criminal record check.