Your lender will undoubtedly require you to complete the forms and disclosures required to process the mortgage loan when applying for a mortgage. While many are pretty straightforward, the paperwork can be intimidating. In some cases, your lender may require an AKA letter, triggered when your credit report returns inconsistencies.
But what is an AKA letter, and how do you write an AKA? Let’s take a closer look below.
What is an AKA letter?
An AKA letter stands for ‘Also Know As’ and is a document required to verify that you are who you say you are. Your lender needs to know exactly who they are providing a loan to. And in some cases, your credit report can return to the lender with multiple names used. When this occurs, the lender requires an AKA letter to confirm that the person’s name on the loan application is the same as those that appear on the applicant’s credit report. While you may think this sounds odd, the fact is that it is very possible that your credit report has more than one name appearing on it, and the lenders need to know why.
Reasons for an AKA letter
To better understand why you received a request for an AKA letter, let’s take a look at what triggers these requirements.
Every time you apply for any type of credit, it reports your name and address to the credit bureau, providing that information at the time of application. Your credit report maintains this information. So, when a lender pulls your credit report, they can see all of your previous addresses and names used to apply for credit. Why would you have multiple names?
Let’s look at two different scenarios.
In this scenario, John Quincy Smith applies for his first credit card while in college and follows his parent’s advice to use his full name on the application. At this point, the name John Quincy Smith is recorded on his credit report. A few years later, John applies for a car loan but only uses John Smith on the application. At this point, a new name, John Smith, is added to the credit report. In another instance, John applies for another loan over the phone, and the person processing the application spells John’s name wrong, entering it as John Smyth. This goes into his credit report as a third name. You can see how, through your life, you can incur many different variations of your name on your credit report, but they are all you.
However, given John has such a common name, there may be cases where a listing for John Smith may not really be the same as John applying for the mortgage. This is where an AKA letter is necessary.
In the second scenario, we look at Jane Doe. Jan has applied for a few loans or credit cards over the years under Jane Doe, so that name is listed on her credit report. However, a few years ago, Jane married and changed her last name to Smith. However, sometimes she uses her married name and maiden name when applying for loans, so she has Jane Doe, Jane Smith, and Jan Doe Smith all in her credit report. She then gets a divorce and a few years later remarries, changing her last name to Jones. Now there are four different names on her credit report.
How does an AKA letter work?
When your lender requests an AKA letter, they are simply looking for confirmation that the names that appear on your credit report are actually you. At this point, you need to review your credit report to ensure that there is not an incidence like John in the above scenario where there was a listing on his report for another John Smith. Once you confirm the information on your credit report, you can write your AKA letter. This letter does not require a bunch of information and is simply used as a record of identity in your loan file.
Looking at scenario one, we can create a sample letter that John could write to his lender. John’s AKA letter could look like this:
To Whom It May Concern,
During the course of my credit history, I have used different variations of my legal name to include John Quincy Smith, John Smith, and an incorrect spelling of John Smyth, which a creditor inadvertently used. These instances are all me. However, the John Smith listing residing in Los Angeles is not me.
John Quincy Smith
A similar letter from Jane could read:
To Whom It May Concern,
My maiden name is Jane Doe. I have been married twice, which changed my name to Smith and Jones. All names shown on my credit report are indeed me.
While all of these instances may seem obvious and minor, they help protect the lender and ensure that the money they are providing for the loan is going to the correct person.
An AKA letter is a common part of the home lending process.
An AKA letter is a commonly required piece of documentation during the lending process. In most cases, these letters are straightforward to fulfill, unlike many other documents that may be necessary during your mortgage lending process.
At Hero Home Programs, we understand that the home buying process can be intimidating and strive to help everyone achieve homeownership. If you have questions about the lending process and would like help finding the perfect options for your situation, Hero Home Programs is here to help. Contact us online today to learn more.