Morph Targets in Skeletal Mesh LODs do not behave correctly

Morph Targets in Skeletal Mesh LODs do not behave correctly

This is a REGRESSION, does not occur in 4.11

1. Download and unpack this file: [Link Removed]
2. Import LOD0
3. Open the Skeletal Mesh
4. Under LOD Settings, select Import LOD Level 1 under LOD Import
5. Choose the LOD1 fbx file
6. After it finishes, Switch from LODAuto at the top of the viewport to LOD1
7. Manipulate any morph target

Result: The morph target causes the character to shrink or grow and stretch at an angle
Expected: Morph targets behave like in LOD0 (this works in 4.11)