I can't imagine a bank, even in a short sales or REO transaction, would encourage a potential buyer to spend money without a signed contract. Did the bank tell you this, or did the agent tell you the bank was applying pressure? If your information came from the agent, you might want to make some kind of demand from the agent's brokerage firm for the money you spent after relying on the agent's representations.
You may want to seek legal advice at some point, but I always urge people to ask the other side before calling a lawyer. Even if the bank or the brokerage firm may not be technically at fault, either of them may want to make some kind of settlement and avoid the ill will.
When purchasing a home from anyone -- bank or otherwise -- you shouldn't spend a dime until the contract is fully ratified. To be fully ratified, both buyer and seller must sign off on all documentation and the contract must be delivered to all parties. All of your appraisal, financing and inspection contingencies are from the *ratification date*. If you didn't receive a copy of all signed paperwork, then you don't have a ratified contract.
If the listing broker cashed your check without ratifying the contract, then I believe that you can go after them, so #1 see if your check has been cashed. In any scenario, get a real estate attorney. Worse case -- the bank accepted another offer. If so, and your check as been cashed, I would think you would get all of your money back from the listing broker. Best case, you'll get a response from the bank and you'll be able to move forward with your purchase.
Especially working with short sales and bank owned properties, you really need an experience buyer's agent to be your advocate.
This sounds like a rotten situation for you. Good luck.