Seller won’t sign EMD release!

[Chad Ullrich]

I was a co-borrower on an FHA loan for my daughter's first home a Duplex. A month into this, and after being approved, under contract, inspections completed, two weeks till closing, the lender calls me and says "we've got a problem!"There's an obscure Guideline in an FHA loan stating a non-occupying co-borrower, with an FHA loan, purchasing a multi family, has to put down 25% instead of the 3.5% we were being told for the last 3 to 4 weeks. We had to cancel on the last day of the inspect or cancel period. Now the seller won't sign the release of my EMD, which was 3.5% roughly $13k. I'm by far not a financially free gentleman yet!

Thanks in advance for any suggestions or opinions! They would be very helpful.