The Bank sets the terms, meaning what it will accept as payment for the house. It's really common to see cash only for a Bank Owned home in Portland, Oregon. I'm sure it9;s common elsewhere too.
My only concern is that the terms of what's accepted is clearly stated in the MLS. However, perhaps the Bank changed it's mind. Which is possible.
I'm sorry for your frustration. I understand that this process of buying a home can be stressful!
Hang in there, and I'm sure you'll find something soon with terms that accept your financing.
Best of luck.