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help with a letter of explanation for overdraft on earnest $$ check.

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help with a letter of explanation for overdraft on earnest $$ check.

Can anyone help with a template or ideas in writing a letter to explain a earnest $$ check. 

 

One of the things the seller asked for was  higher than what we were ready to pay for EM.  We procedded anyway.  the check cleared but went overdrawn.  we deposited money as soon as we saw it was overdrawn(1 day).  Mortgage guy says we should be ok just need a loe.

Message 1 of 8
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Contributor

Re: help with a letter of explanation for overdraft on earnest $$ check.

I am not trying to come off as a jerk, but it would seem to me that having your Earnest Money check overdraw your account is a big deal, not to freak you out, but I would call your LO and beg them to get on the phone with the Underwriter to give you a better idea of what adverse action it could have.  Or, call your bank and beg for a onetime forgiveness to remove the fee before your next statement cuts, that might be a better fix.

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Message 2 of 8
Valued Member

Re: help with a letter of explanation for overdraft on earnest $$ check.

Agree.  its a huge deal.  I'll see what he says.  we just totally goofed up the math when balancing our account.   not really sure how to explain human error in a letter.

Message 3 of 8
Regular Contributor

Re: help with a letter of explanation for overdraft on earnest $$ check.

I would call the bank to see if they will remove the charge as a courtesy.  if you haven't withdrawn with them on the past, they will erase it, that way you will noy have to do the letter of Explain.  If you have already sumitted the bank records, then write in your LOE that it was a simple mathematical error on your part and that the funds were there the next day.

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Message 4 of 8
Valued Member

Re: help with a letter of explanation for overdraft on earnest $$ check.

The bank credited the fee. It still shows as going overdrawn but then shows a credit. The paperwork goes to the underwriter Monday
Message 5 of 8
Frequent Contributor

Re: help with a letter of explanation for overdraft on earnest $$ check.

Is there any reason your LO isn't having a VOD (verification of deposit) done instead? 

 

Overdrawing the account to pay earnest money will definitely concern the underwriter. I don't understand why your LO is even contemplating having you submit bank statements vs. going the VOD route.

Message 6 of 8
Valued Member

Re: help with a letter of explanation for overdraft on earnest $$ check.

not sure. im going to encourage that we go the VOD route unless theres a reason we cant.  He's been in business many years and was reccmeded by friends and is highly endorsed on linkdin.  Maybe he's never had to do these before?  Maybe the underwriter wants it that way?

Message 7 of 8
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Valued Contributor

Re: help with a letter of explanation for overdraft on earnest $$ check.

I think that since it was only one day that the OOPS I made a math miscalculation will be enough in an LOE. A lot of people keep just enough funds in their checking account and if you had reserve funds to clear it the next day, and this is not a pattern in your account then the human error should be obvious. If the underwriter wants to get nasty about it then it is up to your loan officer to deal with him. I would just chalk it up to irony and not worry about it until and unless your loan officer says it is a major problem.

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