Are there some SEC regulations or loopholes that allow this? 

This must be a local regulation?

id=resparulefaqs422010.pdf):"4) Q: The regulation states that while the borrower‘s interest rate is locked, the credit or charge for the interest rate chosen and the adjusted origination charge may not increase from the amount shown on the GFE.

Many of these areas more people are going on government assistance etc. to survive.Most of my commercial clients see the sun belt states as more promising for investment.  

@Ted Strzelecki interesting about the tax/modelling regulations, I did notice another BP member from the same area call it the state of Tax-achussets, so I'll look into that.

I agree with Bill Gulley this time because he is right, and also I agree when folks think too much they get in trouble and look at all the bankers whom the government slap with fines for thinking without advice from a lawyer.Joe Gore

Even on Government Auctions, such is HUD, Fannie Mae, and Freddie Mac will accept the posted asking amount, unless you are outbid by the end of the day.

It's important to stay compliant with RESPA and other regulations and that's part of the servicers job. 

I'd be happy to give any suggestions to help but real estate is local and there may be rules or regulations that may make some of these suggestions unavailable in your area...

Remember this, anyone that has to go to school, pass a state board, then take more courses to keep a license and keep furthering their education because Real Estate for anyone with a license is regulated.