[pucho52]

not buy the house. The seller now is seeking damages? Is the Seller entitled to do so, even though is was not my fault that the mortgage was not approved?

[Sheri G]

It depends. Was your offer to purchase subject to being approved for financing? If so, there is nothing they can do. If you did NOT put that subject clause in place, then they are within their rights to seek recompense for your breaking the contract.