Mortgage Question – Rural Areas?

I am trying to buy a home in a rural part of South Ga. The purchase price is $ 70,00 for a two bedroom wood frame house built in 1940 and 8.6 acres. We tried to do 3.5% down on a FHA loan. The lender kept telling us there would be no problem. We got the appraisal done and it passed all the requirements and was appraised at 88K. 18K over the purchase price. Our lender told us that they wanted a review on the appraisal. She told me they were going to send another appraiser out to the house. She called me the next day and said they were not sending anyone out because the Lender Review Committee denied the mortgage because the home is in a rural area and there are not alot of sales in the area. This is because most of the people in the area own their homes out right.

Now I am stuck with two weeks to close and no lender. I was told by another lender in the area that “If (Bank) denied the loan you will have a hard time trying to find someone else that could make it work. All property addresses go thru an automated market value estimator. If the appraisal comes in higher than the estimated value then the appraisal is reviewed several times. Usually denying it. Ive run into it 2 times in the past month”

What does that mean? should we give up? Am i better off trying a big bank or a small one?
Also, we were told the home is too old for a USDA loan. It was built in 1940

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