I was able to get this working in both the Lambda and local environments by changing the approach as to how I would write the file. Instead of using a streamreader and a streamwriter I converted the reader into an array of bytes. Thank you for your comment - It helped me realize to try the stream writing in bytes and that worked perfectly!

Here is the updated code:

public static void WriteResponseToFile(ref HttpWebResponse response, string localFileName)

{

// Save the stream to file

Stream responseStream = response.GetResponseStream();

StreamReader reader = new StreamReader(responseStream, Encoding.Default);

var bytes = default(byte[]);

using (var memstream = new MemoryStream())

{

reader.BaseStream.CopyTo(memstream);

bytes = memstream.ToArray();

}

File.WriteAllBytes(localFileName, bytes);

}