Loan fell through after two separate pre approvals

[Matthew Miller]

So I had a house under contract. Nice two family as a house hack. After two separate pre approvals from two different lenders. House was under contract. I paid for FHA appraisal and an inspection and gave my deposit. Almost a month going through the FHA 203k process the lender notifies me that he cant get me a loan due to issues with the foreclosure in my past which he knew about from the beginning. Now seller says they are keeping my deposit. House is back on the market. Can they do that?