They must either employ an alternative method which I said before is not as reliable by a long-shot or, they use their own judgement.

. - If your resident has not paid rent, you need to make a connection with your mortgage holder and discuss alternative plans while you are not able to collect full rent.  

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.  

@Lana NielsonYes I do have some thoughts on that actually.I talked to an agent who listed a rehab there a month or two ago, and he told me something really unbelieveable...They staged the house, put in appliances and listed it, and they had their stove stolen not once... not twice... not three timesFOUR TIMES, somebody broke in and dragged the stove out.