The new mortgage rules

In case you missed this story in today’s New York Times, it was reported that Wells Fargo has started requiring a an essay for mortgage applicants. 

[OK this is an old logo but I like it]

When Linda Falcão applied for a mortgage from Wells Fargo, she didn’t realize she would be required to write the type of essay that’s more commonly included with a college application.

So she and her husband, Kemuel Ronis, were taken by surprise when Wells Fargo asked the couple, both 50, to pen a “motivational letter” explaining why they were moving. What they found even more shocking, however, were some of the themes that Wells required them to include in their statement, specifically, their plans regarding an “increase/decrease in family” or property size.

Ok.  I used to work in Fair Housing and I think that questions about family or pregnacy, how ever cleverly asked (Did you catch the “increase/decrease”?] are illegal.  I understand that Ms. Falcao and Mr. Ronis have filed a complaint.  In addition to questions about family plans and size, Wells Fargo asked them other questions that are just strange.

Besides asking for information about their family plans, which was paired with questions about plans to change the “property size,” Wells Fargo also requested that the letter include information that supported the fact that the property, in Glen Mills, Pa., would be their primary residence. The bank also asked them to include their commuting distances to work, as well as other properties that they may own in the area. The request for the so-called motivational letter was included in the bank’s mortgage commitment letter, which offered to approve their loan if they answered the bank’s questions and provided other documentation.

A Wells Fargo spokesman said that motivation letters were generally requested when the loan underwriter had more questions about a borrower’s “occupancy intentions.” For instance, he said the company might request such a letter when a family’s existing home is not yet sold and it wants the buyer to show that the new home will indeed serve as the primary residence.

The spokesman did not say why the bank would request information about a prospective borrower’s family plans, but said that “under no circumstances would any information about family status be used by Wells Fargo as the basis for a decision on a loan application.”

So why ask?  And what do you do with the information?

I find this all disappointing as I have had good experiences with the local office of Wells Fargo when helping some homeowners avoid foreclosure.  But the bottom line:  Think twice before trying to get a loan from Wells Fargo.  I think it is past time for that new Bureau of Consumer Financial Protection that the financial reform bill set up.  Where is Elizabeth Warren when we need her?

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