Who did not accept the closing costs? The seller's bank or the seller? Did the sellers bank previously approve the HUD with the closing costs? You are probably in a contract with the seller, not with the bank if this is a short sale.

I am not a lawyer, but the letter from the bank approving the short sale may not be a binding contract with YOU. It is addressed to the seller and lays out the terms the bank will accept on their loan to the seller. I think you should check with a lawyer.

Also, when is "in the beginning"? When you submitted the offer or when they issued the approval/terms letter to the seller?

As previously mentioned a signed agreement is binding and should hold up unless there is terminology in the contract otherwise. Our recommendation is to review your documents relative to loop holes that would allow the bank to modify their ageement.

It may be advisable to consult an attorney to have them provide you with their input.

Good luck

If you have "signed" agreements then it is not legal to change signed agreements.

Not sure where your case is located, however, every realtor association should have access to Legal Hotline services. Your agent's association membership may have access to this service. Ask he/she to inquire with the local realtor's Legal Hotline.

For example, in California, the agents have access to this... http://www.car.org/legal/