The HOA fees could be entered on any of the lines on the Sch E ... most common would be lines 7, 10,11 or 19. Not sure why they will not allow the valid deduction so I would get proof of HOA payments that match the amount reported to show that even if it is not on the line they want it to be it is still a valid deduction.
Be aware that mortgage brokers are not tax preparers and they usually use a standard "check list" to gather the info for the underwriter so if the amount is not on the line they expect it to be on then they are easily confused so either educate them or ask to talk to their supervisor OR find another mortgage company to deal with.
