Can somebody explain this to me?

In another recent home purchase, I was again representing the buyer. It was another sale where the stated closing date wasn't going to work because the seller couldn't deliver the property on time. We were trying to negotiate an extension, but we couldn't reach an agreement. The day after the closing date, I told the mortgage company to go ahead and fund the sale by putting the money into escrow, hoping to force the seller to accept our extension terms. My client agreed to cover all the mortgage company's transactional costs if the sale didn't go through. The mortgage company refused to fund because the closing date had passed. It claimed it had been sued by a seller for funding a sale after the closing date but would give no other details.

Somebody help me out here. What damages was the seller suing the mortgage company for? I can't come up with any. I can't even come up with a cause of action. I think the mortgage company's story was bollocks. And I know one mortgage company I shan't let my clients anywhere near from now on.