Is this legal?

My sister signed a contract to have a house built. The financing was lined up by the construction company. After construction started, they found out that their financing fell through. The construction company then offered an adjustable rate mortgage instead of the agreed on fixed rate mortgage. The payments and interest rates were also higher than originally agreed upon. this made the house unaffordable. My sister did not agree and construction was stopped.

The contract states that the purchaser is to "diligently apply for, negotiate and attempt in good faith to obtain a mortgage loan approval from the Lender, in a form reasonable acceptable to the Seller. (the Loan Approval)" It then goes on to say that "if Purchaser, in Seller's sole discretion, does not use good faith in attempting to procure a mortgage loan, Purchaser shall be in Default of this Agreement and Seller may exercise any remedies it may have herunder."

Basically, they are saying that she did not try hard enough to get a mortgage and they are keeping her $8,000 deposits.

Is it even legal for them to be the sole decision-maker as to whether or not she tried hard enough to get a mortgage? The mortgage is through them and they don't seem to be reasonable. This is in West Virginia by the way.

Thanks for any help you can give. I would really like to be able to help her out here.

Blake