Document background
The Underwriter Mortgage Letter of Explanation is a critical document in the U.S. mortgage lending process, typically requested when underwriters identify items in a loan application that require additional clarification or context. This document is commonly required for situations such as explaining recent credit inquiries, large deposits, employment gaps, source of funds, or any unusual financial patterns. The letter must comply with federal lending regulations and guidelines set by major mortgage entities like Fannie Mae, Freddie Mac, and the FHA. It serves as a formal communication tool between the borrower and the underwriter, providing necessary context and explanations that can significantly impact the loan approval decision. The document should be detailed enough to address specific concerns while maintaining clarity and professionalism, often accompanied by supporting documentation to verify the explanations provided.
