Many good seller attorneys will modify the language in the contract to state that the "mere existence of a lower appraisal will NOT void the contract automatically,  but will only be applicable if it results in the lender denying the loan for the original amount required" or some similar language.

This will eliminate the possibility that he brings her in under the radar (do drive-bys frequently IMO).Probably best to just walk away and find a reason to deny, but I can't say that's the best thing to do necessarily.

Also ask to see how they filled it out, if they don't like the right units on the right floors it will get denied. 

Still, no lender can use the borrower's current status as a reason to deny a short sale but, the borrower would need to be in imminent danger of default.The lender, upon request by the borrower, must provide the borrower with any and all requirements for alternatives to foreclosure and give them 30 days to respond and meet the requirements of the lender.

He did not deny.

The insurance industry does "blackball" landlords and deny coverage for too many claims or the type of claim.

My extension on the loan was denied by the lender earlier this month. 

They are telling me i will mostly likely be denied because there is no reason I would ever need another duplex.

However, he denied so I stated I would not purchase without the loan being paid off.

You can run credit, but you have to do criminal history second and you cannot deny them because of criminal history until they have had a chance to respond to it.