The part I'm confused on is when he said that, over the course of pages, in order for the bank who owns the property to take you seriously they'll only talk to you about a deal if you provide proof of funds; but the only way the HML will approve you and provide proof of funds is if you bring them a deal.

Basically, act the way they feel -- desperate, scared and confused.  

This other individual was just so adamant that you never payoff properties I was confused...especially cause she didn't really have a legit reason why, just a definitive never, cause it's a stupid thing to do.

You worded this confusing but I would say yes, if your selling you should as for due diligence period to do any inspections and you offer time for a buyer to do inspections.  

The IRS may consider a lease option with a 3 year term as a sale, but this should not be confused with Dodd-Frank.

I dont see how you will make $5k and also want to rent the place, little confused there. 

If you get a chance try answering my other question I quoted you in in the other DF thread if it wasn't too confusing.

I'm confused.  

@Diron Binns  @Gerald Harris  gave you some great steps for wholesaling the deal...I would say the most important thing is to "know your objective"...and to be as clear as possible on your objective as possible, so people can give you advice on how to help you reach that objective...There is a lot of great info and advice on BP, but ultimately we are all making "shots in the dark" as to the best option for you because it's our perspective NOT your Perspective...This info is still valuable, but can become very confusing because you don't know each person's perspective...MY Suggestion are the same to most beginners starting out...first step is to know your goal over the next 3-5 years...I will let you know a little about my perspective...I am a Rehabber and Have Been Buying and Rehabbing over the past 8 years in Chicago...I've been in your shoes...I wanted to accelerate my learning curve and do as many deals as I could as quickly as possible.

I'm confused about what you are saying in your post.