The Real Estate Bloggers

Wells Fargo Requesting Motivation Letter From Potential Borrowers?

Posted: 26 Aug 2010 04:06 AM PDT

Money-house-lady I have never heard of having to write a letter to the mortgage company explaining why a person needed a home loan and certain family circumstances associated with this loan. But that is the story coming from the New York Times as a Linda Falcao and her husband were asked to write a motivation letter on why they were making a home purchase and the family status while making the purchase.

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. via the NY Times

There are certain questions that federal lending standards prohibit lenders from asking. The Fair Housing Act prohibits lending based on disability, sex, or family status, yet Wells Fargo seemed to have crossed that line.

We all know lending has tightened up these days and borrowers are willing to divulge more information to get a home loan. That is not the issue. The problem is when the banks cross the line.

I think Wells Fargo might have in this situation.

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Wells Fargo Requesting Motivation Letter From Potential Borrowers?