Financing Addendum in Purchase Agreement

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When I put together a purchase agreement I included a financing addendum to the end of the purchase agreement.  The seller removed mine and added this one.  Which included the 120% language.  What is the reason that the seller wouldn't want me to get a mortgage for no more than 120%?  See below

FINANCING ADDENDUM TO PURCHASE AGREEMENT NEW MORTGAGE: This Agreement is contingent upon the BUYERS obtaining a commitment in writing for a Conventional mortgage for not more than 120% of the purchase price. BUYERS agree to pay all customary loan costs. BUYERS agree that upon acceptance of this offer to immediately make application for such mortgage with lender and to make their best effort to obtain a mortgage commitment as above provided.

FNMA reo’s/short sales have a restriction that the house can’t be sold or mortgages for more than 120% of the purchase price, for a period of 90 days.  That’s the only time I’ve seen the 120% restriction.  If it is a FNMA property your should be aware of this.