Has anyone else experienced a bank changing terms mid-loan?

[Andrew Freed]

I am in the process of closing on a 5 unit in Worcester MA. I shopped around a ton of lenders and ended up on a lender that offered the following: 5/1 ARM 12 months interest only, 5.25%, 30 year amortization, 20% down, no pre payment penalty, and 50k of renovation funds. We signed the term sheet and moved forward with the appraisal.

They ended up sending it their loan committee and changing the terms on me a few weeks before close: 25% down, 25 year AM, 5.5 interest rate. Obviously I wasn't happy but for the sake of the deal and this late into closing, I have no choice but to move forward. Have other people experienced this recently? Do you think it's due to the recession and banks pulling back or a result of working with a shady credit union? I'd love to hear others experiences.