Letter of Explanation

[bearclaw84]

Hello All,

My LO emailed me today and said, "could you send me a letter of explanation regarding the collection circumstances and then I'll run it through, the underwriter said we are good".  Does this mean my loan is going to be approved as long as my explanation is acceptable or am I reading to much into the email?

[Mike_B03]

One thing I've learned through months of going thru underwriting is that "we are good" and "we should be good" really don't mean much, they seem to be more figures of speech than actual fact...what they should be saying is "...we are good, until we need to ask for the next item". I don't know how many times I've heard those words only to be asked for more stuff later. 

[nolimits]

I would agree that it's hard to interpret that meaning with any real certainity.

Over the years, I have learned this.  Anytime you write a LOE you want to make sure you have a darn good reason for the circumstance happenening.  But be careful NOT to use that as your crutch.  Instead acknowledge it was a difficult time.  List the steps you took to correct and move on.  Crap happens to people.  How people handle the crap says alot.

[sgtodd]

I agree, be sure to demonstrate the actions you took to correct whatever trouble you got into. 

Recently I had to write an LOE for 3 charge offs and a collection from about 6 years ago.  They all happened at the same time for the same reason so I didn't bother to break them out into different letters.  I basically described my situation at the time in one paragraph and then listed every action I took to correct it such as paying them off/settling, how I handle credit card debt today (pay off monthly), review my credit report annualy and I even listed that I was a member of this site and recieve credit alerts.