Before your attorney did any of that, the attorney might approach the bank and politely ask if the bank would like to avoid being sued for specific performance (to force them to sell to you as per the valid parts of the contract)
I speculate that many of the clauses that are in todays bank addenda are not legally enforceable and would not survive a jury trial in court. The banks probably know this but they also know few people will challenge them, some bank foreclosure departments think and act much like any neighborhood bully.
If they refuse to sell to you can you file a lien against the house for the $1500 in repairs? I'd ask the attorney.
It could be that the bank asset managers are being nasty to you as a strategy to make you put pressure on your lender. If you are represented by your own agent in this transaction ask them to get their brokers advice on what to do next.
The bank is between a rock and a hard place. Say they pull the property. After reducing price and marking to market, plus finding another interested party, they could eaily loose another 5-10%. This, they are painfully aware of. I have seen deals go 4 full weeks past close of escrow without issue. The bank will scream and huff and puff but as long as your loan officer takes it on the chin and fields calls from the listing agent, and everyone is given status regularily all is usually well.
Generally you would not have recourse, you would have to rely on the bank being logical. They have more than you to loose. Not to scare you but there may be a per diem clause for not closing on time.
And FYI, the buck cannot be fully passed to bureaucracy, your loan officer should have verified with CalFHA their turn times and advised your Agent according to write a longer contract. They were running 3 weeks for approval even back in 2007 when I last did one. Can only imagine them now.
I am so sorry to hear your predicament but the way you explained it, your recourse is very limited because you have so many days to perform. If the bank did not want to give you another extension, you cannot force their hand to do so. In times where there is bureaucracy or loan mishaps involved, I always urge the selling agent to ask for a longer extension than be stuck and totally out of contract. I wholly sympathize with you but I think the bank holding the property is sticking by your contract and like Elizabeth said, they (the bank people) are the only ones who can give this deal a GO.
You are so close now. Hang in there. Talk to your agent and loan officer. Hopefully, they can find a solution for you. Banks often will extend if persuaded.
I totally understand what you mean about bureaucracy gone mad. And it's so frustrating because it probably seems like you do everything right yet you still eat in the shorts. And that's not fair.