Loan Question

tdwiek · Joined: 26 Jun 2006 Posts: 9

Hi Guys,

First off, I want to say that this is a great forum. Everyone is very knowledgeable, professional and friendly. This is a great place for invaluable info...

Now to my question, is it normal for underwriters to ask for explanation letters of negatives on your credit report that were satisfied well over 3 years ago? It seems that the current mortgage company I am working with has been asking for a lot of these.

Thank you

chow · Posted: Wed Jul 12, 2006 9:34 am Post subject:

Without looking at your credit report I would say yes. It is the UW's responsibility to make sure that they have a reasonable explaination for issues, and that those issues are unlikely to happen again. Usually anything within the last 24 months needs to be explained in detail. You say they ask for a lot of these. Did you have a lot of lates? Were they not all in the same time period? If they are 3-4 months apart, and on different accounts-they are going to ask questions.

UW's are not out to make it tough, they are making sure that you're not strapped too tight, and lose your home, or get behind in your payments.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

It all depends on what it is, what type of loan you are applying for, and what the rest of your profile looks like. Overall I would say yes.

tdwiek · Joined: 26 Jun 2006 Posts: 9

The only reason I was surprised is because they are mainly asking for an explanation on a collection for $400 that was paid in full in 2002. I think the issue is that their credit reporting system marks it. I was assuming that the underwriter would see that it was paid off 4 years ago and not need an explanation letter. Just want to make sure this isn't some tactic to try and delay the loan process..

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Most likely not, it is fairly valid. There are many loan programs out there that require 0 collection activity in the last 7 years, so as I said above, it all depends on what they're doing with your loan.