Lender could not deliver loan as promised

[Andrey Y.]

Hello all, I am hoping you guys (especially lenders) could chime in on this. Long story short, I have agreed to do a cash out-refinance of a free and clear property, 75% LTV at 4.5% interest.

About three weeks or so, into a planned 30 day close, the lender informs me that the property in question (a condo), may not have a required 51% owner occupancy, and I quote, "we may have issues".

So i politely informed him that the property most certainly has lower than 51% occupancy, hence it being a good investment. He quickly found some lender that would do only 60% LTV, 3.875%, 1.5 points.

I asked him what my options were. I asked if I would be responsible for the appraisal if I decide not to proceed with the new terms. He blatantly ignored that question completely. He also informed me that the new terms were not negotiable, ie. it has to be 1.5 points.

Is this ethical on his part? How can it be my responsibility as a customer to know underwriting guidelines of his firm and Fannie Mae/Freddie Mac. As an experienced lender, he only realized the owner occupancy issue towards the end of the closing? The client cannot be held responsible for this error, logically.

I agreed to proceed with the new terms even though his (lack of) professionalism, and the 60%LTV, is not sitting right with me.