I would highly recommend checking out the Black Diamond REI events in Worcester - they do one every other month (alternating with a meet up in Burlington, MA).

Me thinks you need to:a - Look for deals in different markets or using different strategies if deals are falling through,b - Use alternative forms of financing (not cash), if loans are freezing,c - Hang out with different people, if you're surrounded by skepticism, d - ...and look for long term budget corrections, so you can be prepared for something like this (not the source but the impact of this temporary situation) in the future...should it happen again.

Alternately ask for proof of switch over, particularly if it is heat. 

Are there any better alternatives?

@Ondrej Brown I would agree with @Jaysen Medhurst RE- exploring alternatives to FHA. 

Anyone else being required by law to offer alternatives to the age-old security deposit dilemma?

Because the alternative is that he stays and he doesn't pay his rent and you can't get him out or re-rent the place.  

I'd look for other money as an alternative to this. 

I'm open to any advice, tips, or even suggestions for other alternatives for my situation.

Looking at it on an apples to apples basis with alternative options, you'll want to consider points, fees (loan app, appraisals, draws), skin-in-the-game requirements, whether it's a dutch loan or not, if there are extension options, when interest payments are made, the risks involved in the deal...so, for example, would you rather pay 20% interest on 6 months at the end of a deal with no fees....or make monthly payments, put say 20% down, have some fees, and pay 10% to 12%?