Couples' Mortgage Application Raises Discrimination Questions

Aug. 30, 2010— -- How much information is too much for a bank to request when you want a loan? Linda Falcao says she knows the answer to this after Wells Fargo forced her to write an essay covering personal details of her family's life before they would grant her a mortgage.

It all started when Falcao and husband Kemuel Ronis applied for a mortgage in late January. The New York Times first reported that Wells Fargo then asked them to write what the bank called a "motivational letter," disclosing, among other things, why they wanted the house, whether they planned to have more children or increase the size of the property.

The Glen Mills, Pa., couple balked.

"I thought it was invasive," said Falcao. "I felt humiliated and demeaned to have to discuss personal matters like reproduction with a stranger."

Falcao and Ronis said bank officials told them that such a letter was required whenever someone applied for a mortgage and still owned a home. But the reasons seemed to make little sense to the couple.

Falcao, an attorney who specializes in employment law, wondered whether there was something more going on and she says the answers she got from the bank didn't add up.

"I make more money than my husband," said Falcao, whose husband is a teacher. "Were they wondering what would happen to my income if I got pregnant? Is this something they do when the woman makes more than the husband?"

The Fair Housing Act makes it illegal to discriminate in the sale, including financing, of housing based on disability, sex or family status.

Sean Cahan, a mortgage banker with Residential Pacific Mortgage, agreed that the request for the letter is odd in his experience. "We've never heard of being asked to write an essay" when buying a home, he said.

Because Falcao and Ronis had sold their town house and needed to close on the new home, they believed they had little choice but to comply and write the letter.

"I called another bank and told them we were closing in seven days and asked whether there was any way we could kick Wells Fargo to the curb," said Falcao. "That bank told me that they couldn't get me a mortgage in seven days, so Wells Fargo had their foot on my back. At that point ... we were so far along that we didn't have a lot of options. We didn't want to end up homeless. We did what we had to do."

The Couple Writes a Letter

So Falcao and Ronis wrote the "motivational letter" on March 30 -- mere days before the closing -- got the mortgage and moved into their four-bedroom, three-and-a-half bath home. Much as they loved their new house, the letter still stuck in their craw.

Falcao, who had litigated and investigated many cases of employment discrimination, decided to take action.

She and her husband filed a Fair Housing complaint with the Department of Housing and Urban DevelopmentHUD.

"What I've been told by HUD and others is that it is illegal to ask about whether you intend to have children or not," said Falcao.

The bank now says the letter wasn't necessary in the first place.

Vickee Adams, vice president of mortgage communications at Wells Fargo Home Mortgage, said a letter might have been requested if, based on the information provided in the application, the loan underwriter had questions about a borrower's plans to use the home as a primary residence.

"In this case," she said, "subsequent review has indicated that further confirmation of the intended occupancy was unnecessary. Under no circumstance would family status be used by Wells Fargo as the basis for a decision on a loan application," said Adams. "We are pleased that Ms. Falcao and her family were able to obtain a mortgage from Wells Fargo. We apologize for any inconvenience that the request may have caused, and we forgave some of the fees."

HUD is investigating not only Falco and Ronis' claim, but others that include similar instances of possible discrimination in which lenders or brokers inquired about an applicant's family plans or denied a loan based upon an applicant's family status.

"So far, HUD and its Fair Housing Assistance Program partners have received approximately seven such complaints this summer," said Shante Goodloe, a spokeswoman for HUD.

Although Falcao and Ronis, both 50, are nesting snuggly in their new home, Falcao felt she couldn't keep quiet. "It's important to be an example to your children and others, of speaking up and doing good right where you are -- when you see an injustice in life, you can speak out against it, you can make a difference.

"A little common sense and attention to the law would have been beneficial for Wells Fargo. You don't go there with people."