We are looking at the following scenario and need some guidance.
1) Application started as an individual application. Loan Estimate provided in appropriate timeframe and esigned by borrower.
2) Co-Borrower is added several weeks later 5/9
3) The new disclosures were prepared 5/17 (outside of the 3 day Change of Circumstance window.

The originator believes the loan should be cancelled due to the missed 3 day window and then start a new application. This does not seem like a cure to me as it is no different than moving forward with the original loan outside the 3 day window.

Any feedback is appreciated.

Thanks in advance!

Plain and simple - you missed the three-day window to increase your baseline for any fees that increased due to adding an applicant. Lenders do not get a do-over. If you were going to require that the applicant withdraw their application and submit a new joint application, it would have had to happen at that time.