Hi Kevin: At this point, the bank will not do any repairs. They sold the property as-is and will stick to it. In ALMOST every venue (all that I have done business with, anyway, in both NJ and PA,) the town will let the BUYER assume the [responsibility for correcting] violations. In Trenton, for instance, they have a pre-printed form that the buyer signs and it states that the buyer will not only fix the violations but will also not have anyone occupy the property until the violations are fixed. There is a time limit to get it done but, in the case of major repairs, upon application, the city has extended the time limit.
Of course, this means that the city knows what the violations are. I have seen buyers pay the fee and schedule the city's inspection, so the list of violations and the assumption can be completed before closing. However, it is more common for the seller to order and pay for the inspection. In some jurisdictions, the trend has been for the city to appoint an outside engineering company to do the inspections and you can get that company's name at city hall and then contact them yourself, if that's the way it's going to go.
I have seen inspection fees creep up to the $200.00 range. While that's a bit high, compared to the value of the property, it's really nothing, so, my advice is, if you want the property, do what you have to get it.
Having said that, I would NOT pay for repairs for a property that I did not own. The bank may not like it but in the ultimate, they have to obey local ordinance, just as any other homeowner. They should have legal counsel who will tell them that and, since you are dealing with a large corporate entity, one whose employees may not have a clue about NJ state or NJ municipal law and therefore a somewhat cavalier attitude, you should too.
Best of luck.