There are disclosures and REO agents and banks are limited to the amount of material facts they can disclose as they did not occupy the property. However your agent has the fiduciary responsibility to you as your buyers agent to advise and protect you by obtaining all the necessary property inspections at your cost of course. Your purchase contract that you signed if it is a California purchase contract will probably have all parties go through the process of arbitration. I advise you to obtain legal advise from a real estate attorney and start your buyer's agents broker first to try to resolve the issue. You should have a copy of all the disclosures from the REO agent and additional disclosures such as YOUR agent's visual inspection and disclosure advising you to get inspections and waiver signed by you not to obtain inspections if that is what you have chosen to do. I hope this helps. Let me know if you have any questions or need a referral to a real estate attorney who can better advise you.
Here are three sites you might want to visit.
I do not like rotten apples but like justice.