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Letter of Explanation for Foreclosure

Discussion in 'Mortgage After Foreclosure' started by buffaluphagus, Oct 3, 2013.

  1. buffaluphagus

    buffaluphagus LoanSafe Member

    I am in the process of purchasing a home. I foreclosed in 09/2010. New mortgage co has requested I write an letter of explanation explaining the circumstances of why I foreclosed on prior house.

    Does anyone have an examples of letters?

    Thanks a bunch,
    Chris
  2. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    Hello Chris,

    Your loan officer should have examples of an adequate LOE on hand to provide. This does not have to be a complicated letter explaining everything you went through prior to the foreclosure, simply write 1-2 paragraphs explaining the hardships you experienced prior to losing your home. This may not apply to you, but I recommend not mentioning anything about a "strategic default" in the letter.. I take it you are applying for an FHA loan?
  3. buffaluphagus

    buffaluphagus LoanSafe Member

    Yea, applying for FHA loan. It was a strategic default to be honest. Nothing has really changed with finances, so sort of struggling coming up with a letter.
  4. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    This is not uncommon and you did what you deemed was best at the time, that doesn't necessarily mean the loan will be denied. FHA regulations many times will require an LOE after a previous foreclosure, short sale or bankruptcy before your application is approved. You need to dig deep and think about everything that happened before you went through the foreclosure, I'm sure there was at least one financial roadblock you encountered that encouraged you to stop payments and walk away from the property. There are many reasons why you may have been forced into the foreclosure, maybe you had an increase in expenses and could no longer manage your monthly payments or had to help a family member who had major health problems and had no one else to turn too.. The most important thing is to show that you have pulled it together financially over the last three years and have done all you can to manage other debt obligations since. Remember that this will be reviewed by an underwriter who may be understanding of the problems you encountered prior to the foreclosure.
  5. buffaluphagus

    buffaluphagus LoanSafe Member

    I appreciate it. I will get it done tonight.

    Thank you for your help

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