How is your agent responding to the questions you posted above?
You sure left yourself up a proverbial creek without a paddle.
Could the seller walk away if your mortgage isn't in place is a week?
sure, it's possible......
Could you lose all or part of your deposit money?
sure, that's possible, too since you no longer have the mortgage contingency as protection
In regard to what happens with the escrow money if you need another extension or are turned down for the loan - your contract should spell that out............in my area, with a breach of the contract, the money would be held until a new buyer was found. If the sellers ultimately incurred a loss, they would be free to apply the escrow against the loss - or, if the loss exceeds the escrow, they could sue for that higher amount.
In some contracts, the excrowed money is used as "liquidated damages", which means the seller gets that amount, but can't sue for more.
You need to check in with a RE attorney to find out just how large your liability is if you don't get your loan approval within the designated time frame.
When loans take longer than expected.....usually (in my area) the sellers will grant an extension, and do not threaten to walk away.
Why would they want to lose you as a buyer and start the selling process all over again?
Sounds like someone negotiated for them, getting them a stronger position.
Good luck - hope it works out for you.......