I submitted an application to Wells Fargo, but was rejected due to the property debt service.

I have been rejected in the past. 

You are also amortizing the loan over 20 years instead of the more traditional 30 years thus cutting your cash flow more.On a side note the tax assessed value makes little difference to the actual value and if you try to negotiate based on that your offer will likely be rejected.

Always keep in mind the true purpose of screening is to find reasons to reject applicants not reasons to accept them.

Then if you played games I would reject you and go on to next buyer.

I would reject the application without bothering to waste any time investigating.

I thought about the certainly thought about the possible rejections.

Some reject coverage immediately and some charge for the risk. 

If they are family, and they meet your opening standards, you would be wise to communicate with them what the next step would be; rejecting someone on paper for no apparent reason could leave you open to a discrimination claim.

I am guessing you can find another way to reject her application without even bringing up the bedbug issue.