You can take it to management, but methinks the underwriter is going to win this battle since it apparently was in fact disclosed to the underwriter that he is in escrow for another property. 

they left the place rather stinky due to a rotten potato in the cabinet which went unnoticed and I spent 3 weeks cleaning the place to get rid of the stinky weed and cigarette smell.

It's hard to rent out or sell a home with mold or even the smell of mildew.Asbestos - There are certainly Federal and State laws regarding its removal--if necessary. 

The only way to get good as a real estate investor is to do the work in the field.You have to know what a dump of a house looks like, feels like and smells like so when you look at photos of a crapshow in some random town that is a "steal" you know that it needs more than lipstick to go back on the market.

@David Battle where did you get the info that double closings are illegal?

Who knows, only time will tell but in my experience, if the rule prohibits transfer for greater than X in 90 days, and someone tries to get Y for it in 90 days, and do it in a way that requires smoke and mirros...well, if it looks quacks and smells like a duck, it might be a duck.I'm confident Wesley Snipes, Martha Stewart, Willie Nelson, Nicolas Cage, Marc Anthony, Borris Becker,  Annie Leibowitz, Darryl Strawberry, Heidi Fleiss, and Lauren Hill thought they weren't doing anything wrong with their taxes.

I'd advise you to take a look at this and perhaps you can use this as leverage in your battle with the banks. https://www.fanniemae.com/content/eligibility_info...I have been finding more and more frequently that a larger portion of people you'll deal with at the big banks don't have any idea of the difference in max LTV based on the type of transaction you're looking to go through with..

@David Battle Over $100,000 in mistakes across about 20 projects. 

The man inhabits a very small second bedroom in the home and the smell is reportedly atrocious.

Going it alone is fine, but it is going to be a long battle (Depending on your resources and experience level).