Obtaining a House Mortgage

General:
Out of all the surprises we found in the USA, trying to obtain a standard residential mortgage for a house is the most confusing, and difficult we have found. Forget the fact that you had a perfect mortgage record in Canada. Forget the fact that you have a perfect credit history. Forget the fact that you have the required down payment - obtaining a mortgage, as a RESIDENT ALIEN is quite a different story

Tips on Getting a Mortgage:
There is one major problem in obtaining a mortgage in the USA. Nearly all residential mortgages must follow one of two published guidelines - Fannie Mae (FNMA) or Freddie Mac (FHLMC-Federal Home Loan Mortgage Corporation - "A federal Agency purchasing first mortgages, both conventional and federally insured, from members of the Federal Reserve System, and the Federal Home Loan Bank System"). These are two agencies that set guidelines for lenders and mortgaging companies for qualifying you for your mortgage. Here is where the problem occurs. Both agencies have a nasty clause in their guidelines for a resident alien (get used to that word - that is what you are!) obtaining a mortgage: "The resident alien must either have a GREEN CARD, or have been a permanent resident in the USA for a period of two years".

So, were does that leave you? Essentially, you can not obtain a residential mortgage with 95% of the banks and mortgaging companies in the USA. This has nothing to do with your credit rating, ability to meet payments, etc. All mortgaging companies use either FNMA or FHLMC guidelines when qualifying you for your mortgage. Why? Mortgage funds are purchased from either of these associations.

I do strongly advise that you disclose to your lender immediately that you are aware of the FNMA and FHLMC residency requirements. Your lender may forget such requirements and (by mistake) approve your application not knowing this. THIS IS DANGEROUS! - Trust me on this one! It will come out in the wash about 2 days before your closing date when that same lender calls you back and says "We unfortunately have to withdraw our approval of your mortgage as FHMA and/or FHLMC have just denied approval."

Update: (11/2/98): One can be approved using FHLMC guidelines if you are providing a 20% equity position in your 1st mortgage for your home purchase. A "true" 20% equity position basically means that you have the 20% in cash as a down-payment, plus the ability to pay for all closing costs.

Here is how you can get around it, but unfortunately, your mortgage rate will not be the best available. Wells Fargo (and a couple of other larger banks) have set up a special program, specifically targeting Canadian residents who have recently moved to the Twin Cities area, but do not meet the Green Card or residency requirement. You will still need to meet credit, ability to pay, and down-payment requirements. But you will be paying about 1/2 a percent higher for a typical mortgage. They do this by advancing you a second mortgage to make you meet the 20% equity required at time of closing. This way, the first mortgage is for 80% of the home value. Freddie or Fanny are happy with this. You can, after you have been in the USA for your two years, re-finance your mortgage (if rates are good), and you will then meet both FNMA or FHLMC guidelines even without the 20% 1st mortgage equity level.

We can provide the following contact person, who we can also personally recommend. Do let her know that Neil Marriott sent you. (NO I am not getting a better rate for this plug!):

Georgie Yiannias
e-mail: georgie.yiannias@wellsfargo.com
Account Executive, Wells Fargo Mortgage Inc
945 Prairie Center Drive
Eden Prairie, MN 55344
Phone: 952-937-8769
Fax: 952-937-6061
Cellular: 612-669-7482

Documents You Will Need (some from Canada)
You will need quite an extensive amount of documentation to prove your credit worthiness. Some of these documents may need some research to find, or some you simply do not have them now, and may have to get in Canada before you leave. Try and gather this list before you meet with your banker. Your approval will be much faster if complete with all addresses, phone numbers, and fax numbers:

• Purchase Agreement of home (ie Offer Letter)
• Past two years T4 (Income Tax) forms (equivalent to required USA W2 forms)
• Record of Employment (ROE) from previous employers in Canada, if possible if less than 1 year at US job
• Most recent paycheque (yeah, I know - paycheck) stubs
• Three months of most recent bank statements for all/each checking and/or savings accounts in Canada and/or USA
• Current Landlord's name, address, and phone number (if renting)
• USA Social Security Card (NOT Canadian Social Insurance Cards) or ITIN Number
• Canadian Passport/Citizenship card
• INS Authorization (ie TN-1 Visa, H1-B Visa, etc - I-94 card)
• Letter of Recommendation from your Canadian Banker (REALLY important)
• Names, Addresses, Fax/Phone Numbers of Previous Employers in Canada and USA for past 5 years
• Names, Addresses, of Previous Residence
• Names, Addresses, Fax/Phone Numbers of Previous Mortgage Companies in Canada (if applicable)