Explanation letter

[K_J]

Hi Everyone,

I received e-mail today from my LO for explanation on address showing on my credit report. Last year I had co-signed a rental apartment for my mother after she did a short sale. My LO mentioned that I was approved for GUS and need to provided explanation as to when I lived or moved out of this address since it’s not my current address of residence. Please is this going to be a deal breaker and how do I go about this? I signed this lease last year May so it hasn't been one year for me to get out of it.

[ShanetheMortgageMan]

You'll need to be honest, that's always the best policy.  So exactly what you wrote here is what I'd use in the explanation letter.  Because you co-signed on the lease, they may use that payment against you as you are technically on the rental agreement.  If you can provide evidence that your mom has been paying the rent from her own account (not an account that is shared with you) & since it's ending in 3 months then they may be able to exclude it's payment from your debt to income ratio.  USDA is taking awhile to get financed for anyway, so the apartment lease may just end before your loan is ready for closing anyway.

[K_J]

Thank you Shane, the house I am purchasing is a new construction and my loan officer is trying to get me to close by the second week of June latest as this area is being excluded from USDA loan eligibility. The builder confirmed the house will be ready on the 8the of June, do you think this buys me enough time to get out of the apartment lease?

[JM-AM]

Yes if your lease is over June 1st.

But there are times things are let go do to the time left on the commitment ( your lease ).

I would press on with confidence.

[DallasLoanGuy]

maybe mom has been p[aying on time and the apt will release you?

[K_J]

I was able to write LOE which the lender accepted and everything seem good. My file should be sent to USDA this week. Thank you all for the help.

[K_J]

JM-AM,

you are right, I was given this option too but I chose to write LOE which the LO accepted. Thank you for the help.

[K_J]

Dallas,

She has been on time with the payment and I should be out of that lease soon.