My approach to wholesaling houses is an honest one with all parties involved. 

ü The establishment of an internal or third party independent audit function to test for compliance.

It seems that once these properties enter the MLS arena both parties (seller & realtor) are looking for top dollar even if the property's ROI doesn't support it.  

I've been in a sales environment most of my adult career and I can tell you once you figure out the numbers game, you've figured out the most difficult part. I

Both parties have agreed to move on but my Broker says I need a release from them because theirs was a VA loan.

KNOCK KNOCK:  When transferring title between parties, the use of a Quitclaim Deed will cloud the title and block your ability to get title insurance. 

The hard part is connecting with the seller to see if they want to sell fast or not. letters get unanswered as the homeowner is in denial, dead, in a nursing home, etc.

But if the layout can at least make it so, for the most part, say two bedrooms will be close to or attached to one bathroom so it's clear that the students staying in those two rooms are to use this bathroom, that will make it more likely that the students in those bedrooms will take "ownership" of it and keep it relatively clean and not destroyed.I should also note that a smaller common area will make it less likely that your house will be where all the parties are at.

I have had several parties contact with interest but only one family has come out to see the property.  

I don't think its fraud sound more like embezzlement... vote the person out.I own a commercial condo and there are 2 stories of condo's above me and they run the HOA.. last president had issues and they just voted him out and hired a 3rd party management company to run the HOA.