Lender changed Loan terms day before closing

[Cayton Green]

Hello,

My GF is in a pretty frustrating situation with her current lender and I wanted to explain the situation to hopefully get some guidance on what she should do.

She is currently in the process of a cash-out refinance on her condo (investment property) with her lender. Everything was going smooth at first. She signed her Closing Disclosure 3 days before closing day. Then, the DAY BEFORE closing day, the lender informs her that the condo is in fact 'non warrantable' and they can't lend on a traditional conventional loan and need to change the loan terms to a 'non warrantable' loan product which greatly increases her interest rate. They waited till the last minute to get an HOA questionaire which on the day before closing caused them to change loan terms.

The original rate they agreed on and signed a closing disclosure was a 3.875% rate, and the new 'non warrantable' loan product is at a 5.5% interest rate.

This obviously was a huge surprise to us, and we now want to explore other options with other lenders. We just got word today from her current lender that if we don't move forward with the 'non warrantable' loan, that we'd still be charged for the appraisal and the HOA questionaire.

--Can they still charge us for the appraisal and the HOA questionaire even though THEY changed the loan terms last minute? We were misled until the day before closing and never agreed on this new 'non warrantable' loan.

If in fact this sound illegal on their part, what options do we have to dispute this?

Any help is greatly appreciated! Thanks!