SD R, I agree with your advice about talking to the lender. DJNinSD should definitely do that and gather all the information she can.
My main concern is that the lender will try to get as much money back as possible (whether its in DJNinSD’s best interest or not). If that means duping her into staying in a house she should have never been in, then they’ll do it. I just wanted to give her a “heads up” so she doesn’ get suckered into paying more money.