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Letter of Explanation

If there are special circumstances that might be questioned during your loan application, you may have to write, sign, and date a document detailing the reasons.  Some examples include:

  • Describing significant variations between initial and final applications for certain Housing and Urban Development (HUD) loans
  • Explaining a seriously negative credit mark, such as a bankruptcy, tax lien, or judgment
  • Explaining financial hardship
  • Describing employment gaps of more than 30 days
  • Documenting significant increases in amounts on bank or brokerage statements, such as large deposits

Tips for a smoother application process

  • Make sure documents are clear and legible.
  • Don't alter any pages (no strikethroughs, cross-outs, etc.).
  • Send all pages, even the blank ones.