Thread: Buyer Short Sale Problems

Some background first. I'm in Arizona. We began looking for a home for our ward and caregiver back in May. Everything and I mean everything in our target area is a foreclosure or a short sale. Anything that isn't is a seller just looking for a miracle. They are asking way more than any bank would approve of. We are working with an agent that has done quite a few short sales. I apologize for the length of this post.
In late-June we found a short sale that we really liked and put in an offer that was in line with comps in the area. In late September we were told that our offer was accepted by the sellers bank and we had ten days to agree. We paid for home inspection and that came back with no major problems. We told the bank we wanted it.
We began going through arranging our financing through a company recommended by our realtor.
On October 11 our mortgage agent called and said that we should transfer our down payment from our New York Life account to our local bank so we had quick access to a cashier's check since things were moving fast now. Our ward lives in a rental unit and we put in a 30 day notice with their landlord.
On October 26 our lender informed us that everything was done on their end and they were forwarding everything to the title company on a rush basis. Our mortgage lady said that we had a closing date for October 29th and they would call and let us know where and what time to close on that date. On the 28th we called our agent because we were getting worried that we hadn't heard anything. That is when he told us that the seller's bank was now working on a "second approval" of the sale! He also indicated that this process could take days weeks or months to complete.
We realize now that we were stupid to even get involved in this process. We are always diligent consumers and read up on these things as much as we can. We knew it would take a long time to complete this process and the steps that would be required, but we never heard about this "second approval" until now. Now we are really up a creek. We will now have to find another rental this weekend for our ward and we have no idea how long of a lease to negotiate.

We suspect that it might be time to walk.

I do have a few questions:

1. Is there a way to find out what bank holds the seller's mortgage. Our agent indicates that he can't find this information.
2. Is anyone else allowed to use our inspection or appraisal?
3. Is it normal for the seller's agent to continue to list this property as active?
4. Should I have done anything different to better protect myself? We know that eventually we will need to buy something and that it will absolutely be a short sale or foreclosure.

Thanks for any insight and advice you can give.