Bank's loan program requires a "clean" home inspection report. Initial property chosen by borrower comes back with poor home inspection report and Seller does not want to fix the problems identified.

Borrower goes out and finds another property. GFE has already been issued on the initial property.

Should we start over with a "new" application and early discloures - OR do we consider this a "changed circumstance" and reissue the GFE with the new loan amount?

Comments are appreciated.

You could do it either way, but why start over. Just issue a new GFE within three business days of them providing a new property to the bank. If they don't do this in 30 days, send your adverse action notice and you are done or send an ANN now with a counter-offer regarding an acceptable property.

For continuity, I'd treat it as a valid changed circumstance if you've already received the new property address. It is still all part of the original application so just keep on going with it.

Otherwise, I'd follow Randy's AAN suggestion.