After reading another question you posted, I believe that the seller is entitled to your earnest money. I think that they are being very considerate in giving it back to you after someone buys that property.
From what I understand, you did qualify for the loan and could have closed on the loan, except at the last minute you found out that the terms/payment wasn't what you wanted. Typically, that should have been discussed prior to putting in the offer and your rate locked so that this situation doesn't come up. So from my understanding (your other post), the lender did approve you, but you backed out due to terms/payment that you didn't like. I don't think the seller is in default here as it is not his fault.