It depends on the bank, but most of them will try to make the house mortgageable if the offer is good enough. If the price is so ridiculously low, however, that it will sell to an investor who can make a profit by performing repairs himself, they usually opt for that route, as often the buyers are cash and will have a quick closing. When I list a property I reccommend whether or not to make the repairs based upon how much work needs to be done, if the property seems like a good investment property and the listing price. The property needs to have basic items done to secure it (tarping roof, changing locks, boarding windows, etc.), cleaning out debris and health hazard removal, however over and above that is on a case by case basis. Are you purchasing a foreclosure? You can make plumbing and heating, roof and potable water (or anything else for that matter) part of your offer. Realize, however, that if it is a really good deal a buyer with more resources is like to get it ahead of you.
FHA does indeed have a relatively high standard, and many banks that have more than one offer on a property, or that have an property that looks like it will sell quickly, will go with cash or a conventional loan, even if the offer is lower than the FHA. The banks are not necessarily concerned with "safe and liveable" as they are in business to make money. They are more concerned with "Will this be able to close?" and "How Much?" and "How Quickly". They look at the Seller's Net.