You Be The Judge! Unethical or Nature of The Business??

I'm days away from closing a deal that is now 3 weeks delayed.  Las Vegas has a major buyers market going on, so trying to get the buyer to pay late fees for the delay is out of the question.  We can live with that.

I represent the seller.  Buyer is obtaining a VA loan, that we limited my sellers liability to the buyers recurring, non-recurring and non-allowable costs to $500.  Buyer agreed, Seller agreed, Agents were aware & the lender was fully aware.

We received the buyers loan documents yesterday and the title company forwards me an estimated HUD reflecting an additional $1500 in lender JUNK fees (that the buyer can't pay).

Politely I place a phone call to the lender who informs me - it's not HIS problem.  I said, excuse me?  Did you not receive a copy of our counter offer limiting our liability?  His response - word for word:  "I don't care what your counter offer says.  These are the fees we charge, the buyer can't pay them & therefore the seller either pays them or you have a DEAD deal".

After my conversations with the Veterans Administration, their response was "although this behavior in their mind is highly unethical, our only recourse is to cancel escrow or close escrow and file an ethics complaint against the lender after COE."

My client has purchased another home, has been in temporary housing for over a month (as the lender promised us EVERY DAY for 2 1/2 weeks that we'd have loan documents tomorrow).  Then we find out he never ordered the original Certificate of Eligibility (which of course why the delay)!  LOVELY!

My seller is most likely going to pay the difference and close.  Me personally, I think I'd be inclined to let the deal go.  The lender not only charged a 1% loan origination fee, but is receiving a massive Yield Spread Premium & somehow felt the need to add $1500 in additional JUNK fees!!  He has WAY more to lose than I do... although not nearly as much as my client.  Therein lies the problem.

You be the judge!  What would you do?