I've been Clear To Close on HUD REO's before, only to have the loan die because the seller couldn't get a clear title. The seller never had the legal right to list the house for sale because they weren't the owner of record.
It's all a huge money making scam. You think the big banks are making billions in profit simply by checking account overdraft fees??
Good luck Pinkturtle. My $.02.
Good luck! Sounds like you fell in love with a house. This is no different than if a regular seller flaked out and decided not to sell to you. You cannot sue for performance, only for damages, unless you have a contract signed by both parties.