I would simply file against them in small claims, get a judgement since they likely won't show up and get that reported in their credit report.  

There's no need to put up money in advance to claim a tax write-off or a business expense.

Under longstanding case law prohibiting the use of unliquidated claims as offsets (discussed below), however, a buyer should not rely on such a claimed offset as curing the default without a judicial determination of seller liability or a temporary injunction against the cancellation.INJUNCTIONS AGAINST CANCELLATIONSSeparate from the disclosure mandate for serial contract-for-deed sellers, the 2013 legislation amends Minn.

Is there something illegal about doing a quit claim deed and transferring ownership of the property while keeping the obligation to the loan as well as keeping the primary residence at the home?

Your protection is based on the collateral and your claim on it.  

Can anyone explain what this means on a listing in Bell County, TX:"Seller may convey with a Quit Claim Deed if VA title approval is not obtained 5 days prior to closing date."

AKA things you would claim as a capital expense on your taxes and write off over years versus a line item expense in one year.  

I'm excited, but I am having a tough time finding an insurance policy on the place.I thought I had this all nailed down, but I just got a cancellation notice in the mail that states the policy will be cancelled due to failure to comply with an inspection.The property is managed, and the manager claims she had a tough time coordinating a single time when all four tenants could meet with the inspector.

They seem identical to me with the difference being that i need to check against Dodd Frank for seller finance, but at the same time I can take title and claim the asset and equity on my balance sheet.What are thoughts on using one vs the other?

I would be cautious with any deal that offers only a Quit Claim to grant you an interest.