Lender problems closing "flips"

We have been rehabbing distressed properties for about 5 months now. Lately, we have run into a problem with some lenders when we relist our rehabbed homes. They check the tax record and see that we purchased the property three months ago for $340,000. Now they see we are reselling it for $530,000.? It was appraised at $530,000 with no problem by their appraiser, and the buyer is putting 40% ($200,000) down!!!? But the lender is requiring that we send them all of our invoices showing how much money went into it.? I told them that they can check city permits, as we did everything under the city’s regulation, and that I will send them before and after pictures, but we do not want them sticking their heads into our business matters like that.
We were told that this is a new requirement with flips.
Any advice/comment?? Thanks!

I typically send a nice letter outlining the work we did, the risk we took by buying at auction, the eviction, clean up, etc. I may even send them a basic accounting of dollars spent.
Keep in mind what this is about. The underwriter is looking to cover their butt in the case the file is audited - or in case the loan goes bad down the road. It is not about putting their nose in your business. Be friendly, and help them help you.

They will either ask you for invoices or ask for 2nd appraiser to go out and appraise the property.