Buying A Home In Which The Seller Is On A Government Watchlist

 My husband and I are purchasing a unique property in NJ and from the beginning the deal seemed too good to be true. The listing description initially stated "property as is" and "buyer to do own due diligence". The house however is a newer build, modernized, and seller has only owned 3 years. Because of this we really started to deep dive research the property and the seller to find out what the catch could be. Title on the house was clear and all permits were closed. We found public records online that the seller had a foreclosure lis pendens document filed just days before the property listed so we suspected financial issues played a part in the seller wanting to move after putting so much work into the house. Our house inspection initially turned up electrical concerns, however the seller was cooperative in allowing us to bring in an electrician and was willing to give $20k credit. We concluded attorney review after this and everything was progressing smoothly until we were suddenly contacted by our mortgage lender telling us they could no longer provide the loan due to government search results coming back that the seller is on the GSA exclusion list. He advised that likely no bank would give us the loan for that house and we'd have to go through a private lender. They also stated they could not divulge details of why the seller was on such a list. The mortage lender (20 years experience) our real estate agent (15 years), and attorney(35 years) had all NEVER experienced a situation like this in which someone came back as being on that list so everyone is a little stumped on how to advise us on how we move forward. A google search turns up limited info on the GSA exclusion list except that it can be for anything from unpaid taxes to terrorism so we don't know what we're dealing with. Given the sellers predicament, we feel the pool of people able or willing to purchase this property is really really small. Does anyone have any experience with someone on a GSA exclusion list that can provide us information about this? Is there a way to find out why the seller is on such a list? Would someone on this list have their back so far against the wall that we'd be able to request additional compensation for having to get approved for another loan, at a higher rate now? If this entire deal falls through, do we have any legal recourse for the time and money we've wasted because of this seller's legal/financial issues?