Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 03-09-2007, 01:23 PM
 
Location: Clayton, NC
1,515 posts, read 6,967,083 times
Reputation: 664

Advertisements

So a friend & I were talking today, she was instructed to write a "mercy letter" to her loan officer to help get approval for her home loan. She does not understand what this means, and I'm having a hard time trying to explain it.

Has anyone ever had to write one of these things? Any tips I can pass on to my friend?
Reply With Quote Quick reply to this message

 
Old 03-09-2007, 01:25 PM
 
Location: Union County, NC
2,115 posts, read 7,061,558 times
Reputation: 1141
Quote:
Originally Posted by ferrickhead28 View Post
So a friend & I were talking today, she was instructed to write a "mercy letter" to her loan officer to help get approval for her home loan. She does not understand what this means, and I'm having a hard time trying to explain it.

Has anyone ever had to write one of these things? Any tips I can pass on to my friend?
Why I've never heard of this so I am really interested in the response but I must comment that the terminology makes it sound quite painful. I'm not sure I could do it.

SL
Reply With Quote Quick reply to this message
 
Old 03-09-2007, 01:28 PM
 
Location: Clayton, NC
1,515 posts, read 6,967,083 times
Reputation: 664
She had some bumps in her credit thanks to a sleezy ex-husband. I think the letter wants her to describe what the bumps in her credit were or something.

I feel horrible for her, she really wants to move into this townhouse she found. Single mom, trying to make it and now has to write a letter about a past she's trying to leave behind. I'm just dumbfounded on a way to explain it to her. I've looked on the internet, but I can't find any explanation on a better way to have her write it.

I guess they use the term "mercy letter" because you are at the mercy of the loan officer whether you get the loan or not. I never heard of it before until she described to me what they wanted.
Reply With Quote Quick reply to this message
 
Old 03-09-2007, 02:27 PM
 
Location: Wake Forest
2,834 posts, read 12,002,054 times
Reputation: 1060
They want her to explain the "bumps", what was she responsible for, how did she deal with it, what is she doing now that she and ex are no longer together, etc. They need to be able to justify giving her a loan based on looking at the past with her ex and her now without him. The more she gives them regarding explanations, the better.

Leigh
Reply With Quote Quick reply to this message
 
Old 03-09-2007, 02:39 PM
 
991 posts, read 4,607,166 times
Reputation: 315
I had to do that when I bought my house in New York, I had some credit cards that were in my name only that my ex-husband had ran up during our marriage, usually if you can explain the "bumps" and the debts are satisfied the loan officer will approve the loan from what I was told. They did approve my loan so I guess it worked!
Reply With Quote Quick reply to this message
 
Old 03-09-2007, 03:10 PM
 
460 posts, read 2,417,017 times
Reputation: 184
I had to this for a car loan once. I am not proud of this trust me. My ex husband's credit (derrogatory) kept showing up on my report. I kept a copy of my divorce documents showing he was responsible for all the debts in the marriage (mainly because I didn't have any). I wrote a letter stating that at the time of my divorce blah blah referencing he was responsible for his own credit and that since that time I had managed to improve my situation, referencing my employment and stating that I needed the car to insure my employment.
Just reconstruct my letter. Reference divorce documents and be ready with stamped (seal) copies. State the past situation is over and that the new place is her building toward a blah blah...become independent, single mom...homeowner.
It is really quite easy go for full effect but say the words. I am not responsible for my own siutation, I intend to be a good loan customer, I have moved on.
Reply With Quote Quick reply to this message
 
Old 03-09-2007, 03:32 PM
 
Location: Burlington VT
1,405 posts, read 4,773,870 times
Reputation: 554
Quote:
Originally Posted by ferrickhead28 View Post
She had some bumps in her credit thanks to a sleezy ex-husband. I think the letter wants her to describe what the bumps in her credit were or something.

I feel horrible for her, she really wants to move into this townhouse she found. Single mom, trying to make it and now has to write a letter about a past she's trying to leave behind. I'm just dumbfounded on a way to explain it to her. I've looked on the internet, but I can't find any explanation on a better way to have her write it.

I guess they use the term "mercy letter" because you are at the mercy of the loan officer whether you get the loan or not. I never heard of it before until she described to me what they wanted.
The loan officer isn't the person who makes the decision on the loan.
The underwriter is.
These letters of explanation are occasionally written to explain extenuating circumstances and may help get a loan through. I stress the word "may".
But if the loan officer suggests it, I'd do it. The underwriter may simply have requested some help defending her decision to make the loan.
Letters are also often written to credit bureaus and creditors. This may have changed - but it used to be the case that if the response didn't come back from the creditor within a certain time - the credit bureau was required to remove the "late" or whatever from the file.

If the credit problem is due to a deadbeat former louse....er spouse, and the loan officer is requesting a letter - write it!

...hope this helps

David
Reply With Quote Quick reply to this message
 
Old 11-10-2009, 03:50 PM
 
1 posts, read 12,484 times
Reputation: 13
Smile mercy letter to tax officer

AS per our meeting with the tax officer he ask us to write a mercy letter to him for the approval of his boss in releasing the certificate of complaince.]
Reply With Quote Quick reply to this message
 
Old 11-10-2009, 09:52 PM
 
9,803 posts, read 16,114,994 times
Reputation: 8266
Just curious cuz I don't know---------don't banks get audited?

Would they have to keep their " mercy letters" on file for the bank examiner doing the audit?
Reply With Quote Quick reply to this message
 
Old 11-11-2009, 06:33 AM
 
Location: Wake Forest, NC
835 posts, read 3,968,879 times
Reputation: 650
Couple of other reasons for what is called Letters of Explanation:

1- Underwriter is trying to determine if the problems in the past are an isolated incident and unlikely to reoccur in the future (major illness, car accident with medical bills and lost wages etc). Trying to justify approving your loan.

2- It has been found that loan files with explanation letters perform (actually get paid on time) than those without so if an underwriter requests one just send it in.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages

All times are GMT -6.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top