Fannie Mae cancellation problem

[John Pitts]

Newbie alert!

I am trying to purchase my second home that is a single family REO through Fannie Mae. I offered their asking price and they accepted so we are in an active contract. I am not a realtor and have limited experience so I'm trying to learn as I go through experience and reading the works of RE "Pro's." We submitted the offer of 44,900 for a 2/2 1400 sf home with a "contingent on inspection" and when there was a possible foundation issue found we submitted the cancellation notice. They informed us that we were past the inspection period becuase fannie mae starts the countdown when the "verbal" agreement is made, not when the final contract signatures are sent. They sent their own cancellation notice saying they will allow us to cancel if they can keep the $2000 deposit. We did not sign that cancellation either so the only contract with buyer and seller signatures is the active contract. I said if they will not allow me to cancel without losing the deposit I would purchase the house (had a contractor look at the cracks and reassure us) but they said they "changed their minds" and were not selling it. As of right now they have not refunded the deposit, will not allow me to move forward, and have placed the home back on the market without any disclosures of inspection findings or changing the listing. Please help...do I need an attourney? Nobody, including fannie mae reps, have thus far told me any steps I can do. I did call fannie mae and they sent me to "tier 2" but they haven't called back yet.

Thanks so much everybody.