Any way to Mortgage SFH which has MIL and unpermitted garage unit

[Martin S.]

We just got a denial because the appraiser classified the single family home as an illegal 3 unit.

There is a mother in law unit, which we got a permit from the seller, but there is an unpermitted 1bed/1bath in the garage, which we are willing to have removed if the loan would be approved.

The MIL unit is currently rented with the lease ending 10/31, so if need be we can ask the seller to have the tenant vacate at that time..

I don't know what to do, I just emailed the loan officer back that there is a permit for the MIL unit, which I attached to the email and also an addendum for sellers credit for the unpermitted work (the garage) which we were planning to demolish once we purchased the house. Is there any chance that the bank will consider this or offer some terms in order to get the loan approved?

Or is there any chance another bank would finance it? We are in for over $1000 with inspections and appraisals, not even including my travel expenses to see the property 1200 miles away and time spent on working on this deal, and I have no clue what the escrow/title company is charging at this point...