? about short sale

[paintergirl]

What is the name of your state (only U.S. law)?
North Carolina
We are/were in process of purchasing a short sale home through a real estate agent. We were a week away from closing and all was okay until the appraisal was done - a red flag was raised and bank would not go through with loan because there was an investor in between, the contract was between us and the investor. The underwriter brought it up that contract was not between the current homeowners and us. How should this have been written up? and also why didn't realtor - which was our buyer's agent disclose the info about an investor in the beginning? Also loan officer knew of the investor when we first met, we were told we could not do a FHA loan because there was a 90 day wait as well, but were not told about the investor or why?

[HUD-1]

FHA has an anti-flipping rule that stops homeowners from getting ripped off. There have been extensive problems with investors buying properties, putting on a coat of paint, doubling the price and then putting pressure on appraisers to come in at the inflated value. Hopefully your contract is subject to FHA financing. An astute agent/loan officer would have identified this as an issue early on. This provision has been in effect since 2003.