It’s not unusual these days to have a lender request a “letter of explanation” from a home buyer or someone who is buying or refinancing their home.  A letter of explanation (or LOE) is often used to help provide more information to the underwriter or lender based on information that is disclosed on an application or credit report. LOE’s may address anything from gaps in employment to inquiries on a credit report and is intended to help explain or add support to the transaction. If a borrower has had an extenuating circumstance and is trying to have an exception made to an underwriting guideline, they may be asked to write a LOE.

Understanding the Importance of a Letter of Explanation

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