release of information, "loan packet" to barower if lender c

I haven't heard of a law regarding this. But as far as I know, the lender may give alternate options to the borrowers. If a particular lender is unable to give loan to a borrower, he may inform the borrower about other lenders or directly passover the borrower's file to other lenders and help them in getting the loan.

i'm not sure what you'd be looking for in a "borrower's package." you have rights to a copy of an appraisal for which you have paid. most creditors freely give a copy of a credit report. as for pay stubs, bank statements, etc. you ought to only give photocopies of those to begin with, while retaining your originals.

what else would there be? internal documentation that the lender uses is not relevant to a "consumer file."

It sounds like she submitted all of her docs to one company, did not save copied for herself....and now wants to send them to someone else.