What's the point of having mortgage contingencies?

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So my buyer was denied his loan after BofA (Bunch of @$$ho13z) screwed up his loan application and delayed the closing for three weeks. After he did everything they asked for and demanded. They even emailed him that the loam is approved and then yanked it because they resent the file to a different underwriter. Long painful story short, the deal is dead. Now even the seller's attorney is refusing to give back his deposit and 20% down payment! How is this possible?! It's not the buyer's fault and there is a mortgage contingency in the contract! The seller's attorney even works as a judge in his small municipality! Can anything be done to make this right short of litigation? I feel terrible for the buyer who lost all his money on title, survey, attorney fees and to add insult to injury, a sleazy judge/lawyer who defies contract laws! Should I be surprised this happened? The seller's attorney gave us nothing buy grief all along the way and even told the seller "I told you something like this might happen when the buyer has to get loan approval. Shoulda sold to a cash buyer." hello?! I bought a cash buyer for 15k less than seller wants and when she wanted more, I found this buyer who is will g yo pay the price but needs the loan to make it happen. Who else ever heard of something like this? Unbelievable!