I'd even pay a small fee for this.I don't charge for applications. 

This is a just fancy real estate sounding way of saying "fee you ain't getting back" 

If you did decide to take the GC to court it would take years to get your money back plus legal fees.

They charge leasing fees even after the tenant they placed trashes the home and abandons it.

I live in Midwest so would have to incur a management fee as well.

This is the fundamental problem I have with Wall Street who takes too much fees off the hard-working efforts of the middle class. 

Selling the home to my tenants would keep me from having to put it on the market, advertise, and pay real estate agent fees, while helping these first time homebuyers too.

What will suck is if he builds a house on it and tries to sell it and when the buyer does a title search they realize he owes a bank $71k + late fees etc etc.Can they go after him personally if they foreclose - it is my understanding they cannot (not an attorney) as they can only take back the property.

There was no max amount that could be charged over the years, or limit to how high or often the HOA fees could go.

Now keep in mind though on your second VA loan the funding fee goes up to 3.3 % unless you are willing to put down 5% which will then bring the funding fee back down to 1.3 % i believe.