Get Explanation Letter 2020-2024

There is no specific format to the LoE but it should be short, concise and factual (ideally 1 page, maximum 2 pages) and addresses any issues there may be in your application.

A letter of explanation (sometimes called an LOE or LOW) is a document requested by mortgage lenders when they want more details about your financial situation. An underwriter may request a letter of explanation if they run into questions about your finances during the mortgage approval process.

“Derogatory” is seen as negative to lenders, and can include late payments, collection accounts, bankruptcy, charge-offs and other negative marks on your credit report. This can impact your ability to qualify for new credit.

How to write a letter of explanation The date you're writing the letter. The lender's name, mailing address, and phone number. Your full legal name and loan application number. Your explanation, with references to any supporting documents you're including. Your mailing address and phone number.

To begin writing this type of letter, you might explain the situation or circumstance and any contributing factors....Consider including information to answer questions like: What happened? How did it happen? Were there contributing factors? What is the current situation?

How to write a letter of explanation The date you're writing the letter. The lender's name, mailing address, and phone number. Your full legal name and loan application number. Your explanation, with references to any supporting documents you're including. Your mailing address and phone number.

The lender's name and address. Your name (as it appears on your application) and any client/reference/file number. The date you're submitting the letter and the expected closing date (if you know it) A summary statement or short intro that quickly helps an underwriter identify the topic under discussion.

The key to writing a great letter of explanation is to keep it short, simple and informative. Be clear and write with as much detail as you can since someone else will need to understand your situation. Avoid including irrelevant information or answers to questions the underwriter didn't ask.