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I have never done an FHA letter of explanation for certain credits. does anyone have a sample so that i can go by? i just need to have an idea.

banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

basically, you're writing a letter to a person.

To Whom It May Concern,

This letter of explanation will help understand my past credit history with these credit accounts (list them here) or credit inquiries (list company name and dates).
I was unable to make payment due to medical reasons/death/other reason. (Write specific reasons and/or dates that may apply)

Please contact me at xxx-xxx-xxxx for any questions regarding this letter.

Make sure to have the proof ready.....or send it in to validate your statement. Make everything simple. Do not divulge information that is NOT needed. Also, your loan officer should be helping you with this.

Like | Dislike | Share | Posted: Sat, 02/23/2008 - 20:34 | Post subject:

ezmortgageloanz's picture
ezmortgageloanz | Joined: April 6, 2007 10:25 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

The LOE is a letter of explanation that you are writing to the underwriting department to compel them to overlook some credit blemishes in your past.

Here is one that I wrote the other day:

General Description of Situation:

The XXXX's have longed to purchase their first home ever since relocating from Texas to Virginia in May of 2000. The XXXX's decided to relocate to Virginia in pursuit of higher pay and employment stabilization---gaps in employment due to contributing factors outside the XXXX's control (downsizing, employer bankruptcy, etc.) were the driving forces behind the XXXX's late payment history. Another factor contributing to the XXXX's past was an attempt to sustain their family’s overhead on one income while Mrs. XXXX attended school (in order to improve her job/income prospects). This letter of explanation hopes to highlight and stress that the problems of the past are just that---in the past and that the XXXX's both deserve and are qualified to purchase their first home.

Positive Aspects of File:

The XXXX's are both gainfully employed in fields in high demand (healthcare/nursing and law enforcement), with employment stability and future income growth potential. In addition, the XXXX's have demonstrated an earnest desire to get “caught up” with their past obligations and have taken upon themselves to arrange payment schedules with two of the creditors with outstanding accounts in collections (payment commitments/schedules are included with this summary).

Description of Issues:
1. Husband has been employed in the same field for four years, but only with his current employer for 4 months.
2. Past collection accounts.

Compensating Factors:
1. Length of time in present profession.
2. Co-borrower is in a profession that allows for future income expansion.
3. Never late on prior rent payments.
4. Good pay history established since 2006.
5. All ratios are within qualifying guidelines.

Thank you for your time in considering our application for the XXXX's.

I personally believe that this is one of those “case-by-case” situations that FHA is so great for! Please help me assist this family of three in obtaining the dream of homeownership.

Hope this helps.


Scott Miller

Like | Dislike | Share | Posted: Sun, 02/24/2008 - 20:57 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I ahev divorced for two years and my husband left me with two kids, since then im attending college full time, working full time and i have three foster children . My ex left me with his debts adn im making my way building my credit up Chase bank finced me a car and i kept up with the payments for 11month never late, I pay my bills on time but his medical bills is huting my score , please help

Like | Dislike | Share | Posted: Fri, 03/07/2008 - 11:38 | Post subject:

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi jackie,

Welcome to the forum.

I cannot understand why are you paying your ex husband's medical bill and other debts? What you says it you are doing a great job to improve your credit.

Is it written in your divorce decree that you would have to pay his debts?

Best of luck,

Like | Dislike | Share | Posted: Fri, 03/07/2008 - 13:49 | Post subject:

Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jackie,

How come your spouse's medical bills are hurting your score? It's good that you have never been late on your car payments but I don't understand why your spouse isn't paying for his bills. You aren't responsible in any way. By the way, didn't your spouse apply for any health insurance policy with which he could have paid off all the bills? Perhaps your spouse has used your information for the medical bills and that's the reason it is affecting your score.

I shall suggest that you go for consolidation of the medical bills if at all your spouse isn't willing to pay them off. But first of all, have a talk with the creditors and check any available document to find out for sure why your credit is getting affected because of the spouse's bills.

I know of one such community which can help you consolidate medical bills - it is the debtconsolidationcare community at " .

Good luck

Like | Dislike | Share | Posted: Mon, 03/10/2008 - 00:50 | Post subject:

lisa.scherzer's picture
lisa.scherzer | Joined: January 4, 2008 08:48 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jackie,

I would get a copy of all three credit reports from transunion, equifax, and experian and then dispute all of his medical bills. Just state they are not yours. There is no need to explain that you were married, etc. All of them may not come off the report but some of them should. This should help your credit score even more allowing you to purchase a home soon.

P.S. Dont pay a company to do it for you. You can do this for free yourself.

Like | Dislike | Share | Posted: Mon, 03/10/2008 - 21:07 | Post subject:

freds11's picture
freds11 | Joined: March 17, 2008 08:55 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

How do you do it on your own?

Like | Dislike | Share | Posted: Mon, 03/17/2008 - 11:48 | Post subject:

sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Freds,

Welcome to the forums.

Do you want to now how Lisa alone could dispute all medical bills?

Like | Dislike | Share | Posted: Mon, 03/17/2008 - 22:48 | Post subject:

John11's picture
John11 | Joined: March 11, 2008 08:20 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Your loan officer should assit you with the letter. If I have a borrower write the letter themselves, it turns into a boring life long story...and possibly a country song. I have found what works best for me is to interview the client, write the LOE and have the borrower review for accuracy before signing. This way it's clean and to the point. Underwriters don't have time nor will they take the time to read a novel.

Like | Dislike | Share | Posted: Tue, 03/18/2008 - 14:19 | Post subject:

helping_user's picture
helping_user | Joined: March 31, 2006 03:39 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

So John, you mean lenders write the letter of explanation for poor credit and then get it rechecked by the would-be borrower?

Like | Dislike | Share | Posted: Wed, 03/19/2008 - 04:08 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

They can write it based on what the borower tells them and nothing else. I am not implying that they make up a story or enter anything fradulant. The letter needs to be clear and to the point and I have found borrowers try to explain way too much and turn an LOE into a novel.

Like | Dislike | Share | Posted: Wed, 03/19/2008 - 07:40 | Post subject:

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