Lender Stalling After Conditional Approval, Financing Contingency And Closing Date Passed, $50k At Risk. What Are My Options?

Location: DC

Hey all, I could really use some advice from anyone who's dealt with something similar on options to push back on the mortgage company. Would a lawyer be helpful here?

My wife and I were conditionally approved for a VA loan over $1.5M at 6.5%. We've provided all the information requested for the conditions, but the lender keeps dragging things out without giving us a clear answer about what's holding up final approval. Our financing contingency has now passed, and we're at risk of losing our $50K deposit.

My best guess is that they don't believe we'll actually live there. They haven't confirmed that's the issue, but here's the background:

We initially started looking for investment properties, then found a place we really liked in a neighborhood convenient to both our jobs. We would move into an apartment in the property as our primary residence. It would save me about 3-4 hours of commuting every day. I work in person full time (no hybrid).

We currently have a large house in the suburbs, but all except one of our kids have either moved out or will be gone within six months. We'd already planned to move into the city in about two years. Finding the right place moved that timeline up, and frankly, I'm tired of the commute. Yes, the apartment is smaller than our current house. That's part of downsizing.

I understand conditional approval isn't a guarantee. But the loan officer repeatedly told me I had nothing to worry about and that moving into the smaller apartment wasn't a problem. If I'd known the loan wouldn't be approved (so far) or had they raised concerns before the financing contingency expired, I would've cancelled the contract. Now $50k is at risk.

I've also wondered whether the loan size or rate is a factor. My understanding is that the lender needs to sell assets to free up cash, but I don't know whether that has anything to do with our loan. “Lender's remorse” has crossed my mind, though that's speculation.

Are there any laws or regulations that would protect me? Could getting a lawyer (what type) help reduce the risk in this case?