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floraharding · Joined: 25 Jul 2009 Posts: 4 2.61 Dollars($)

Hello, We filed bk in 2003. In late 04 we had a baby and i stopped working. Some charge offs ended up on our credit which a paid after I went back to work in late 07. We have kept our credit clean for over a year and a half and now we are trying to buy a home. We have been approved thru DU for fha, we have the DP and our debt to income ratio is a bit high but our broker says that is not a problem. My husband has been at his job for over 5 years. The bank they are trying to get us financed with wants a letter of explanation for the paid charge offs before it goes to underwirting. What do you think, is this hopeless?

gmakerley · Posted: Sun Jul 26, 2009 7:18 pm Post subject:

a letter of explanation is simply that - you jot down the situation that existed in the past, how you resolved it, etc. what you'll also want to do is to mention you realize the importance of good credit - one of the reasons you chose to pay the charge offs in full rather than ignore them. that will make an underwriter think more highly of you.

this should not impede your approval whatsoever.

Guest

I am just worried because these charge offs occured after our BK. The bank they normally used said no way. This other bank wants the letter of explanation with the package when they send it to underwriting. I am so nervous because one bank already said no. Thank you for giving me some hope!!

gmakerley · Posted: Mon Jul 27, 2009 9:21 am Post subject:

lenders are definitely more critical with derogatory information appearing post-bankruptcy; that's why they want the explanation letter now. at least your loan officer is being proactive and anticipating an issue that might arise. i hope you wrote a nice, florid letter.

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Does anyone else have a more thorough answer for this q??