[sailfish27]

I can't see why they would care if the attic or any part of the house was insulated for that matter. All banks care about is do you have good enough credit for the loan.

Not exactly true. The bank cares a lot about the property that's why they have it appraised. You pay for the appraisal but you can't get a loan without one. The appraisers job is to value the property but also to point out any deficiencies to the bank. If there is a clear violation, safety, code or otherwise, a lot of banks will not give you a loan until rectified.

When you get a loan from a bank they are in effect part owners. One of the first questions when applying for a second is "what are you going to use the money for"? An addition, "ok fine, we need to inspect property".

I have heard of banks asking for more. Ask your friend how the bank knew their was no insulation if he says it was the appraiser, he's probably telling the truth. If your still not sure ask to see the actual appraisal, the lack of insulation would be noted on the report.