Do you only do QM, and thus this was a denial and counter offer situation? Yes, I think it is valid.
Was this after more discussion with the borrower in finding a more affordable loan option for them? Yes, I think an argument can be made there as well.
Changes this sizable are not made at the bank's whim without input and discussion with the borrower. Sound documentation of the borrower's input and intent should make a case for a valid change of circumstance, IMO.
_________________________
I don't repeat gossip, so listen closely...