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I'm going to be moving back to the states soon after living in Canada full a few years. I called wells Fargo to look into getting a mortgage today, and they told me that they will not pull my credit report until I am physically resident in the USA , and so i can't apply for a mortgage until I move back to the states. Is this standard across the industry? Is this even standard for wells Fargo? This guy seemed kinda like a moron so I'm not even sure that I trust him to know his own corporate policies.

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    I bet it's to protect against various forms of fraud. – RonJohn Jan 22 at 13:54
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    Since you're mentioning that you're going to move back to the states, can you clarify two questions: are you a US citizen? and, when was the last time you had a US address and open credit accounts in the US? – dwizum Jan 22 at 13:56
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    @RonJohn not so much fraud as just (potentially) time wasting from people who are testing the waters but not really intent on moving back, and/or people who will be a flight risk. – dwizum Jan 22 at 13:57
  • @dwizum Yes I'm a US citizen. I last lived in the US 20 months ago, and I have multiple open accounts in the US. I also have a signed employment contract in the US, to start in a few months. – user278411 Jan 22 at 14:33
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    Sounds like you just need to shop banks! Many will still want a local current address that matches your credit report, but that can be as easy as getting a month to month rental in the area you're targeting. Or use your parent's address or another relative's (just be upfront about it with your lender). Only being out for 20 months and having active accounts means you've still got plenty of material on your report once they actually pull it. – dwizum Jan 22 at 14:38
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It's hard to answer your literal question of "is this typical?" much less your more focused question of if it's typical for a specific bank, because mortgage lending in the US is somewhat subjective around some factors, and I'm guessing that no one here is an expert in that bank's specific policies.

Generally, banks are looking to screen candidates who have appropriate income, aren't risky from a credit perspective, and are "invested" in the idea of buying a home, living in it, making payments, and just generally staying put (or, at least, being responsible if they don't stay put). How they actually establish those characteristics can vary a bit.

That last point is relevant for your situation. Banks don't like to lend to people who may be a flight risk, i.e. people who aren't specifically attached to living in their new house. If you've built a life outside the US, and have no local address history in the US, a lender might interpret that as you having an "escape plan" of moving back to that foreign country if things go poorly for you in the US. As such, they want to see that you have some established history of living in the location where you're buying your new home, in order to show that you're "attached" to that area. Basically, it boils down to this: someone who can easily and happily move back to a foreign country is a risk, because if that person walks away from the mortgage (instead of paying it off), it's much harder (or impossible) for the US bank to pursue debt for that foreigner versus someone who remains in the US.

Even for US residents, banks will often want to see an address history, since this lets them determine how "flighty" you are in terms of your living arrangements. They like to see that you've owned or rented consistently, since that means you are in the habit of making a regular housing payment. Lenders will generally require two years of addresses, and they will cross check any rented or owned (mortgaged) address against your credit report in order to verify your history. Someone who's rented for a month, then lived with a friend, then moved in with their parents, then rented for three months, and so on - won't be as attractive as someone who's been in the same apartment or house for two years. And someone with zero US based history means they have nothing to check, which is a red flag.

Depending on your specific situation, there may be other factors at play, specifically with respect to your credit report. Banks use credit reports for a number of purposes with respect to mortgage applications. The most obvious is using your credit score as a way to determine risk. But they also use your report as a way to verify your identity (they compare answers you give to the info on the report, i.e. they look at your address history and see if it matches the report). They also look at your trade line specific history to see how you handle paying for housing. If you've rented or paid a mortgage, the bank will look to see how well you behaved - were you constantly marked as late, even if you never defaulted on the loan?

The catch with all of that is, a credit report only contains 7 years of history. If you've been out of the US for more than 7 years, there's literally no point in pulling your US credit report, because there will basically be nothing useful on it. Getting a US address and using US-based credit accounts will get you a history, which the bank can then evaluate. Some banks will look at foreign credit reports and attempt to translate their meaning in order to evaluate your application (Fannie Mae even has guidance on how to use foreign credit reports) but not all banks have the appetite for doing that.

In some cases, an address history restriction or other requirement may not even be up to the bank. If you're trying to get a Fannie Mae/Freddie Mac loan, or a loan with PMI, or any loan with any third party taking on some form of risk, those third parties will have requirements and the bank will need to enforce them. These requirements can vary from third party to third party - so, Wells Fargo may not even have the same requirements for all of their mortgages, it may vary if a third party is involved.

So, while we can't tell you the specific reason why that lender told you that, or if it is "common," there are a number of considerations. If you need a mortgage now and can't establish a US-based history first, you may need to shop for mortgage lenders who can be more flexible. Getting help from a mortgage broker may be a good way of doing some of the legwork, if you can find one who is familiar with helping foreign residents.

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    Thank you for your thorough and helpful answer. Most of the potential issues you raise don't apply to me, but I can see how a bank would just say "for simplicity, let's not bother with people living abroad." In my case, though, I am only a temporary resident abroad (20 months), owned my house in US for 6 years before that, credit score >800 (though they refuse to find that out), U.S. citizen without the permanent right to live anywhere else. – user278411 Jan 22 at 14:39

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