Letters of Explanation - When submitting a mortgage loan file for underwriting, a Competent Loan Officer will often request Letters of Explanation for derogatory credit, employment lapses or other unusual situations in the file. Supporting documentation such as medical bills, etc. will give more strength to the letters

If the Loan Officer fails to anticipate what Letters of Explanation are needed they along with the supporting documentation are often requested later by the underwriter and can delay the approval of loan.

This is another reason to always select a professional, experienced and licensed Loan Officer for the smoothest, most expeditious loan process.

Frequently a letter of explanation will help if there are unusual circumstances. Letters of explanation can be used to explain why emergencies, extended out-of-area travel during the payment period, mortgage payments which rolled over from one month to the next, banks which held checks until they cleared, medical problems, bills sent to the wrong address, items that really don't belong to you, items that were covered in a divorce settlement etc. may be on your credit report. If we ask you for a letter of explanation, or if you have trouble composing letters of explanation, please ask us and we will provide you with appropriate advice to assist you through the process of devising the LOE/LOX

Letter of Explanation - Letter explaining a specific situation, document, or service. Usually from a borrowers employer, family member if the borrower is living with them, or from the borrwers themself.

Bankruptcies, foreclosures and judgements may all require a letter of explanation.

Sometimes we may help you overcome minor credit blemishes with a LOE (letter of explanation.)

If your lender asks you about execessive inquiries to your credit report, you may need to provide a letter of explanation citing that your were shopping for a mortgage at that time.

When composing your letter of explanation (LOE), you should keep in mind that this is your chance to impress the U/W and make him/her understand your past. This should not be a 2 sentence letter, but a thought out and precise explanation of your negative issues, and steps that you have taken to better your credit profile. In many cases, a well prepared LOE will swing a loan into an approve, as with out a LOE or a poorly written one, you would be without an approved mortgage loan.

Often times it is needed to explain late payments or why you are in a current negative financial situation.

And in most cases this is just a formality and doesn't have to be a short story. Usually a couple of sentences will be able to explain enough to the lender.

Lenders will sometimes require a letter of explaination if you have a period of unemployment in the recent past.

Home buyers who have difficulties securing home financing due to some negative credit impact can sometimes acquire a mortgage loan with a Letter of Explanation. The LOE must explain the cause of the credit blemishes, such as a divorce. The LOE must also convince the lending banks the unlikelihood of reoccurences.

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