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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?
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.
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.
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.
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!
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.
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!
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.]
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.
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