The Lender gave the SELLER the GFE and not the buyer?

We just had a very unusual situation happen. Our buyer is using a Columbia Maryland mortgage lender as requested by the seller, even though we did not recommend them, because the seller said the only way they would give them closing costs is using her preferred lender.

This is a FSBO being orchestrated by a former part-time Realtor helping her parents sell their home in Columbia, Maryland and who hasn't been licensed in several years. She had it listed at what it might have sold for in 2006 at the height of the market. We negotiated the initial offer back and forth and did get them to come down from the initial amount they desired. It's much easier to come down in steps so we wanted to get it down as much up front and then when the appraisal came in, get them to lower it to appraised amount.

We provided the buyers with a very thorough CMA to show them market research and of course Realtors are not appraisers so we can't determine market value, but we can get pretty close. The appraisal came in low as we expected; it came in $2k below our CMA. The change in sales price will obviously change the closing costs and we have been waiting for a GFE The buyer has not been provided an updated GFE yet, nor have WE, the BUYER's Realtor but the lender provided it to the SELLER already and the seller's daughter is coming back wanting to negotiate closing costs because "you know you can't get cash back at settlement" (yes we know).

Do Mortgage Lenders have any ethical responsibility to buyers who hire them to do their loans like Realtors do? Are they able to divulge a buyers financial information to that point where they are sharing it behind the buyers back with the seller? I know this is morally wrong but is it illegal or unethical?

Then there is the question of the daughter practicing real estate without a license......

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