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Something is wrong here, You would not have to accept terms higher than were written in the Third Party Financing Addendum, so the other lender would not force you to take terms other than what you agreed to with your purchase offer. The 15 days had to do with your financing approval not the property being approved.
Did your Realtor fill out the Third Party Financing Addendum? Did you understand it?
And no you do not have to go to the Sellers Lender, If you have a letter of denial from a reputable lender or two that is certainly enough.
What do you mean "listed as a condo" are you talking about on the contract or in the MLS?
I am not an atty. and if I am not to give legal advise but I would certainly want to ask one if a condo contract would be enforceable on a single family home.
I hope your problem has been fixed by now
Why would the buyer not "try" the lender who thinks they can get it done?
All lenders are not alike.