What state are you in? I’m in Texas, the way it works here is as long as you have a denial letter from your lender you should be able to get your money back.

I can’t tell you what is legal or not since chances are Im not licensed to practice law in your state so get an attorney in your state to help you. Usually nothing happens but if they incurred expenses due to the promises that you made and then broke you might be hearing from their legal counsel first.
If you can not afford an attorney you might want to check out this link
Free legal aid search for all states:

They will probably not sue you, since it is not worth the attorney fees for the small amount involved. If you were unable to get financing the check would have to be returned anyway. More than likely they have moved on and are trying to sell the house to some one how wants it and can get their loan approved.

Without seeing the exact wording on your contract none of us can tell you if you illegally put a stop pay on the check or not. It directly depends on what contingencies were put into your contract.

The earnest money is theirs to keep. You gave it to show that you were “earnest” in your desire to purchase. In exchange they have not been trying to sell the house for the last 4 months.

Expect a law suit and possible criminal charges for fraud as you canceled the check without legal cause.