Thank you so much for the information you've given me. By the way, is there a limit to this thread or can I continue to ask until I get all the info I need (I only have a few more questions left)?
Response 1: You can continue to ask until you get the information that you need.
If I still want to pursue the house, do I have the option to walk away from the broker/lender?
Response 2: Yes, you can. You are not required by any law to stay with a particular lender if you do not like the lender's practices.
Aside from the home appraisal fee, will I be required to pay additional fees (filing, etc)?
Response 3: The bank may have already charged you for the application fee or may ask you to pay it. If you refuse, there is really nothing the bank can do to you if you are no longer getting the loan from the bank. Also, if you have already done home inspection, you would be responsible for paying the inspector for his/her services.
If/When I find another broker/lender, will I have to do anything in conjunction with broker/lender #1 (disclose to him what happened).
Response 4: You do not have to, but may have to tell your new broker about the appraisal. The new broker may take the previous appraisal and in so doing would save you additional fee.
Can broker #2 ask for the files/case from broker #1 to include the home appraisal report?
Response 5: No. The files belong to the first lender and the lender does not have any legal obligation to release the files to a new lender. However, if you have paid for the appraisal report, you are entitled to a copy of the report. So, broker #1 has to provide that information to you if you have not received a copy of the report. If you have received a copy of the report, you can just e-mail it to broker #2.
Will I have to do it in writing when I ask the lender/broker to stop processing my loan and ask for the denial letter?
Response 6: Absolutely, to protect yourself and for record purposes. E-mail qualifies as writing. So, you can e-mail the broker especially if you have been communicating with the broker by e-mail.
Will I also have to do it in writing when I notify the seller to cancel the purchase transaction and ask for my earnest money back?
Response 7: Yes. You have to make sure to follow the procedures outlined in your Purchase and Sale Agreement for giving notices. If e-mail or fax notices are accepted, then you can send the notice by e-mail or fax.
Or will it be easier/quicker to just hire an Attorney and let him do those?
Response 8: There is no need for an Attorney at this time.
Can I also sue the lender for coercing/forcing me into paying for the down payment using my TSP? I just feel violated that I'm being told to give up my life/retirement savings just to satisfy their demands.
Response 9: No, you cannot it. The broker can ask you to get the money from your TSP, but you are not required to. You can just say NO just as you are doing now.