Wow that was an incredible explanation.

To the best of my knowledge, the fact that you already have the proposed property under contract prior to the sale of the relinquished property does NOT make a difference.Just don't close on the replacement property until AFTER you sell the relinquished property.Here's a link to a great explanation of the identification rules:https://firstexchange.com/content/top-ten-identification-rules-1031-exchangesThe resident 1031 expert on BP is @Dave Foster. 

If examples are presented keep asking for explanations until you know exactly what was done and why.When my kids were in college and had no idea what they wanted to do after graduation, I suggested they look at the Sunday newspaper Employment Display ads section. 

Your explanation helps.

Hopefully there is a good explanation for that and it's not that they couldn't find tenants. 

I'd say about 60% of the time FHA will not work for someone that already owns real estate, but you haven't thus far identified anything that would put you in that 60%, and in fact with that explanation for motivation you just gave I'd say you're odds of "true denial" (instead of "loan originator is misinformed denial") are reduced from about 60% to 40%.

Ok, here is a simple explanation.

The most logical explanation refusing to play ball by any rules but the cartel’s.

What was their explanation?

Go back and read my original explanation.