errrr.... you're trying to use an FHA loan on an REO purchase?
Not going to fly.
FHA loans have some requirements before approval will happen that has to do with repairs, inspections, etc. Banks don't want to be bothered with that garbage. REOs are as-is sales, take it or leave it. FHA Loans in many cases require major repairs be completed before closing.
Do some research on buying REO property. Sounds like perhaps you might be a little confused as to what factors the bank is really considering.... more