They denied the contract saying they need to be closer to $130 (without saying how close of corse).

On an REO, they would not have any grounds to deny it, but then again, if they were to see that the person buying the REO was the same person that they took it from, they could always reject the offer.

Now my lender (I'm in WA state) that I've used for all of them is denying them because they are saying PMI has a 90 day seasoning rule, but they can still underwrite the Fannie/Freddie loans.To me this doesn't make a lot of sense, because I thought Fannie/Freddie provided their own PMI on the loans they were doing.Anyone run into this?

The title company would have acted according to the contract.If you feel you've wrongly been denied your earnest money, you should contact a real estate lawyer and have him deal with the title company.

I have asked for a refund, and been denied.

The judge denied the case fro "lack of small claims jurisdiction" and gave us 20 days to file as regular court.

If you don't, go find it, don't waste your time and the banks trying to get creative, they will most likely deny your offer.

I'm worried HUD could deny us the home and take the earnest money if I make the repair.Should I listen to the loan officer and follow through with the repair?

Say what you want about the city but you can't deny (if you know the trut truth that is) that is has one of the most stable rental markets in the US.

or so years... when I was well past 10 FNMA mortgages... that commercial lenders with their "5-year fixed rates" are eager to lend to people like us who are on the 'right side' of this massive RE wealth transfer, and that most likely US Bank (retail side) will sell this loan -- so a "No" to the last bullet will just mean you may get denied in underwriting (not from the loan broker/officer) if they detect a problem, meaning no loan for your deal.