We signed a contract for a residential property in phoenix, AZ and we are ready to close. Now we found out that, the lender lied about the death of the person. When we asked about the death cause they said he died of sickness in the hospital. But later we found that the person did suicide in the house. We are now backing out of the contract and they said they will give only half of the earnest money. We think we are being cheated. We know that they need not disclose the death in the house, but when we inquired shouldn't they tell the truth or at least say we don't know?
Please advice.

Not sure why a death in the house has any bearing on home value or the closing,

Did they lie about anything about the house that would effect the value of the home or the

In fact I don't see why they can not keep all of the earnest money.

while this was a lie about how the previous owner died, it may not be considereed a material disclosure issue in many areas. If your state has a specific disclosure about deaths in a home, but I really don't know of one.