My other properties are in an area that require a somewhat higher income in order to qualify, but with this potential property a person with much lower means can qualify. 

I would suggest you screen this person as a new tenant and see if he qualifies.

I heard that we have an attorney has to submit a package to the courts and wait 45 days for a  trial date to see if the seller's son qualifies for guardianship.

As these loans get bigger it's harder and harder to qualify on your own financials. 

Also, since this is your primary residence, you can qualify for a HELOC for up to 100% [this is almost impossible with an investment property].  

I am looking into hard money loans but have no experience here with them and with 4 other loans in my portfolio, dont think I would qualify for a conventional loan due to my income/debt ratio.

That might mean a large tax write-off IF the owner is a real estate professional (otherwise passive loss rules apply).Since your brother owns another business it is doubtful that he would be able to qualify as a real estate professional, but if he is married his spouse might. 

Is it possible for a buyer to use the rental income that would be generated by roommates to qualify for a conventional mortgage? 

Read up on how to qualify tenants. 

I'm curious about something though, if the PMC has been given a clear profile of what a qualified tenant looks like and they put someone in a unit that they haven't fully screened or for some other reason slips through the cracks, shouldn't they have some financial responsibility for the lost rents, cost of evictions and any required rehab work that is a result of that?