Is there a pre existing loan with that bank with either of you?

My mom lives in a nice house that she has paid off.

Regarding not being paid, have you contacted them? 

If you discovered the issue before paying for the appraisal that could hopefully save some costs (in case the appraiser is with the wrong AMC).Pre-vetting with the lender on rental history/AIRbnb/1007 as well as seasoning could help. 

I’d rather have more properties with mortgages than a couple paid off properties.

Once converted to a rental, repairs and improvements may qualify as deductible expenses, but pre-conversion repairs typically do not.

These are done between the buyer (you) and Seller.The situation that is most common to find these properties are in a foreclosure proceeding, or pre-foreclosure. 

Know that every long term lender will require a survey and if something comes up on it when you are trying to sell or refi, you could get stuck in hard money without an easy or quick way to get out.Is there a pre-payment penalty?

Suggest you check in with him/her on this additional service as your attorney is already intimately familiar with the file and you can often give them pre-authorized amounts to settle on vs trying to squeeze all the blood from that turnip. 

When you tell them they will only get paid when the loan closes, they will disappear.If required, the only money you should ever send to the lender is for a credit check.