Ah, yes...an interesting conundrum that we see more of in this new era of lending. While the guidelines RD states are permissable the reality is that there are not too many banks in America that are willing to take on a loan carrying such a risk. The foreclosure process is expensive for lenders if a borrower defaults and not something they want to risk.
Your client is more likely to find better loan terms if they are capable of meeting the 25% down payment requirement anyway which will ultimately lead to lower costs and greater profit over the longer term. However, if you continue to look around and find a source, please come back to update us all so that we can all benefit from making this service provider a resourceful referral partner!