Appraisal stated home liveable when it's not close to it.

Hello! I am the buyer's agent who happens to work for fnma and knows that these banks never consider repairs unless they're lender required. The lender uses the appraiser to determine repairs and in it's current condition, you cannot even flush the toilet as it rains in the living room. The appraiser said the home was in liveable condition, had never seen the utilities on and we have a conventional loan. Mold all over basement. Leaking in the walls, non functional air, furnace or water heater and all of the above-mentioned are red-tagged by the gas company, so no gas either. she put none of this in her report. Outraged, I told the lender to have her look at it again. She added the mold remediaton but left the sentence stating it's livable. Anyone walking in the front door could see the home is not liveable.
bank jumped on it and is trying to force my client to close or lose his earnest money. I have never seen this kind of thing fly. Can my client sue about this? 4 years to find this house and the appraiser has made it impossible to buy. Help