I think you have received several reasonable answers to your question. The real answer will lie in the specifics of your purchase contract. Without that information it is impossible for us to give advice which will most likely involve contacting a real estate attorney since Realtors do not practice law.
Rather that speak to the what if's of a legal battle, there is a practical side to all of this. A legal battle or a battle over earnest money as liquidated damages, is an expensive undertaking. Just because you win, does not mean you will pay dearly for that victory. There is no way of knowing that a judge would grant you legal fees as part of your "victory." Also the buyer may not really have any assets to lose. Then you would have a judgement not worth the paper its printed on.
I would suggest that the best way to deal with this unfortunate situation would be to see if you can get this willing buyer to purchase your home. I understand your frustration and the real costs of doing this, but I think the alternatives are much less attractive and more expensive.
One of the big lessons learned is that in NM a deal is not really closed until you receive your check. Does that make future plans very difficult to make? Yes it does. The financing landscape is a treacherous one these days and it takes experience and finese to really understand it.
We never like to hear about these situations, and hope that in two weeks the buyer's loan will come through and at least stop your financial bleeding.