Help me write a couple of LOX

[Anonymous]

So we've been approved on our USDA backed loan thru Fairway Independent Mortgage Corp. and the UW has asked for the following LOX's (blue text was a copy and paste from an email from my mortgage handler while red text is my start to explanations):

LOX – signed by both – explaining all disputed accounts and derogatory credit - My wife has several old (more than 3 years) medical collections which we are in the process of disputing due to HIPAA violations.  They should be removed within the next few months.  Other than those collections her report is spotless.  My credit file has a lot of lates (a few up to 90 days) none of which are a mortgage (all student loans) that are older than 2 years.  They were during a time when I was in and out of work and struggling to pay my bills.  I've since established my career with a stable, healthy architecture firm and maintain a budgeting tool for forecasting and planning our financial future as indicated by my clean credit history over these past current years.

LOX – signed and dated by both explaining the lower 2010 earnings than 2009 for both borrowers.  - Would stating that we both got a raise sufficient?  Also, my wife has a bonus structure at work which is performance based and is over and above her normal hourly wage...  She's made substantially more this year (2011) than last year as well.

LOX – Borrowers to sign a budget breakdown letter using net income showing how they will accommodate large housing payment increase. - Is there a sample of what they are looking for somewhere online that I can use as a guide?  I mean I'm pretty sure I could put one together but copying a sample format would be very handy.

Provide 12 months cancelled rent checks (front and back).  - We've been renting from my aunt who has never been and most likely won't be after we move out, a typical landlord.  I'm pretty sure she won't be able to provide us with cancelled checks.  Does anyone know if this is something her bank can provide to her?  Is there any other documentation or way of covering this request for the lender?

Can you guys provide some feedback on these responses?  I need to type them up into individual letters but wanted some comments before I do so.

[llecs]

I'm not a mortgage guru by any means, so bumping for others.

A CA can report on a medical debt. That, in and of iteself, isn't a HIPAA issue. You might have to pay those baddies, though. Talk to your LO. You might also have to clear up those dispute comments before proceeding. YMMV on the lender.

I had a 50% raise in the course of 2010, prior to engaging in the mortgage process ourselves. I did have to explain that. The stubs were clear that the raise occurred 6-7 months prior to applying, but we explained it, the company verified, and it was all good.

The housing payment increase is what my lender called a "payment shock". We too had that. Our mortgage payment compared to our prior rent was triple the $$$. We had to budget that out, but they didn't ask for any info other than what was reporting on our CRs. They ignored utilities, school costs, etc.

Your aunt won't have cancelled checks. You have the cancelled checks. I'd go to your bank and ask for copies if not provided within your statement. On mine, for example, I can click online and pull up a copy of that check, front and back. The lender wants proof that she cashed the checks for the amount you stated on your app.

[Anonymous]

Thank you for the bump and I'll call my bank about the cancelled checks.  I didn't realize I could get them...  I'm wondering what I need to say if I paid my aunt in cash a couple of months.  I'm formiliar with the phrase payment shock but need to find a way to do a budget breakout.

[YHWHUDAH]

Just be aware, the HIPPA process resulting in deletion is not law and it is not a guarantee that your medical collections will be deleted. However, some people are successful with it.  Just write a LOE and explain just what you have stated. If you have any documentation for back up attach it with the LOE.  The letter about the collections can state something about your unemployment.

Could say same thing about 2010 earnings higher than 2009. You were out of work, so of course your earnings will be lower, or that you got raises but be sure that is provable.

You can find a template online regarding a budget and just fix it to meet your needs. Be sure that this is very accurate and that you want budget shows that you would not have payment shock

Get a letter from your aunt. If you have bank statements or her bank statement use that also as documentation.

Proofread your letters and make them personal.  The letters should address when it happen, why it happen, and what have you done to do to insure you have learnt from it and insure it will never happen again.

[Phitor]

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@Anonymous wrote:

LOX – signed and dated by both explaining the lower 2010 earnings than 2009 for both borrowers.  - Would stating that we both got a raise sufficient?  Also, my wife has a bonus structure at work which is performance based and is over and above her normal hourly wage...  She's made substantially more this year (2011) than last year as well.

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Yours and others' response to this question so far has confused me. They are questioning a *decrease* in earnings, not an increase. So a raise, as you and others have offered, will not explain this. They are questioning a downward trend in income from 2009 to 2010, not an increase.

Am I misreading the LOX request? Just trying to save you some potential heartache if we are all misreading the request...

[Anonymous]

Phitor:  I just figured that out too.  And have a legit explanation for it.  I had signed up for a Dependent Care and Unreimbursed Medical Plan with ALFAC which directly impacts total Net Income.  So I've got that one covered.

[IOBA]

um....UW doens't normally look at net income -  they look at GROSS income.

I was worried becuase I have allocations from the paycheck to go to different savings accounts (one for food, savings, gas, utilties, etc).   I was REALLY  worried the UW would look at the net pay and deny us since the net pay is equal to one mortgage payment, about 50% of our income.

The lender(s) reassured us it's the NET income they care about.   And since I was putting away what would be a "mortgage" payment into savings (through paycheck allocation) every payday, they wouldn't be concerned at all.   That and I was saving for taxes, utilities, etc before the "net" check came to me.

Double check with the lender/UW about that.   Is the W-2 income for 2009 higher than W-2 income for 2010?  THAT is probably what the lender is asking about.