You can ask for modification in the Letter of Offer, but doubt most banks will entertain as it is part of their standard letter.
TS said that she has signed the LO. So for sure cannot change the conditions.
Like what someone has mentioned, you need to refer to the LO for the T&C.
If still have not sign the loan agreement, then still have chance to avoid penalty

You are quite right. Once you have sign the LO, it means that you have accepted the offer from the bank. As to whether there is any penalty for the cancellation, will depend on the conditions stated on the LO. Also up to the bank.
If their lawyer has proceeded with the loan agreement, there could be some charges, depending to the stage of work and also up to the lawyer's firm.