I went to one of the lenders we originally rejected.

I have seen them reject an offer for a certain amount, then lower the asking price BELOW that amount a month later. 

All the while people are putting in offers and getting rejected.

That happens with direct endorsement when the funding underwritter messes up and FHA rejects it, that happens.

Occupancy loads are a legitimate reason to reject someone, but 3 people in 2 bedrooms is not unreasonable.I for sure wouldn't have handled it like he did.

There is also a distinction between rejecting someone with children privately during your screening process and how you advertise. 

My lender just called me and said underwriting rejected my applications due to "not liking my overall credit profile".The lender is reputable (KW mortgage) and I've done a few deals with him before. 

@Brian Larson Here’s another recent post on the topic where this issue came up and was discussed: https://www.biggerpockets.com/forums/52/topics/794873-it-is-now-illegal-to-reject-section-8-in-california

There is a lot of conflicting information on the legality of collecting SI#s and a landlords right to reject applicants for not providing it.

All other considerations aside the law states you can not reject a applicant because they have a service dog.