Mortgage Underwriter Notes

Here is a real example of a letter of explanation that we reviewed recently. This borrower makes over $200,000/Year with lots of tax liens and NSF’s (Non-sufficient fund) appears on bank statements normally known as bounce check. We requested for a letter of explanation from the borrower. After reviewing this letter that was submitted, we decline the loan instantly. This is an example of what not to write:

“To whom it may concern:

To clarify and answer several questions for loan application, I am respectfully submitting this letter.

My work practices and personality traits while not altogether conventional, work beautifully for me and my business as you can see from my commission report.

I am a “rainmaker” not a “bean counter”.

Because of this, I am not the best at accounting. For instance, I have four bank accounts, some of which have tens of thousands of dollars in them. While at the bank getting my last two months statements, I discovered one account was deficient. I, of course, immediately corrected it. My point is that this is just not my “gift zone”.

Because of this, I became lax in keeping up with my taxes. I received some tax liens which I went into an agreement to pay off at a rate of $2000.00 a month. While paying these off, I failed to file my 2009 and 2010 taxes.

I am happy to report and verify that the tax liens have been paid off in full and my 2009 and 2010 taxes have been filed.”

respectfully,

The borrower

Although this borrower has alot in savings and make good income, she CLEARLY admits that she is incapable of keeping up with her bills (and proud of it). She even forget to file her own income taxes. This letter only tells us what causes the tax liens and NSF’s, but it does not tell me how she will not make the same mistake again.

If you are ever ask to write a letter about the financial mistake you have made. Please, don’t write this one.