I'm sure you had an agent in the process of buying a HUD home, because it is only an agent that can show it to you and put in the contract. If there was an extension that needed to be filed your agent should have done that. Get your agent to read in the contract; but they generally states AS-IS. Get the agent to go over the contract with you since they should have filed an extension if she saw it was not closing in time. As agents that is what we are there for which is to clarify the contract and do any paperwork and correspond with the Seller's agent so things can be done in a timely manner. Each contract states, "time is of the essence".
If you want to put in a lower offer putting this in to consideration, just let me know. I hope you get your Earnest Money back.