The Letter of Explanation

Have you been asked by your mortgage lender during the underwriting process to write a letter of explanation (LOX) and don’t know where to begin?  You might have an overdraft fee on your bank account ( or NSF // non-sufficient funds), a late payment or two on your credit report, a different address on your bank statements than your current mailing address, or a deposit to your bank account that needs to be sourced.

Here’s the basic structure you can follow when crafting your LOX:

  1. Greeting and date
  2. Cite the incident with all applicable identifying information (date, last four numbers of the account number, institution/creditor)
  3. Explanation/solution/what has been done to improve the situation and prevent future occurrences
  4. If requested, supply appropriate documentation (cancelled checks, proof of payment, etc.)
  5. Closing



Re: Mortgage Application

Dear Sir or Madam:

Below are the explanations you have requested in…

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