What does lox mean in underwriting?

Letter of Explanation
As a former FHA underwriter, the Letter of Explanation, or LOX or LOE as some call them, is the single most important document in a borderline file. The LOX (what we call them here in the great state of Michigan), is the document underwriters turn to when they are undecided on a loan.

Why do underwriters ask for letters of explanation?

If something turns up that could disqualify your application, the underwriter might ask for a letter of explanation to help better understand the specific details of the issue. Tip: The underwriter will check your credit scores, employment, and other items again shortly before finalizing the loan.

What is a signed and dated lox?

Any and all derogatory showing on the credit report must be addressed in an LOX FROM THE BORROWER. The letter must be signed and dated. The letter must reference in detail, what happened to create the negative information, how it was resolved and what the borrower has done to insure the situation will not happen again.

How do I write a letter of explanation for a mortgage underwriter?

How to write a letter of explanation

The lender’s name and address.
Your name and your application number.
The date you’re submitting the letter and expected closing date (if you know it)
A short statement that helps an underwriter fully understand your situation in regards to the reason for concern.

How do I write a letter of explanation for a foreclosure?

Your letter should start with an introduction of who you are and what kind of loan you are applying for. Lead into your story with something like “We want to explain our foreclosure from six years ago.” Then, launch right into the details that led you to lose your home. This is not the time to be shy or modest.

How do I explain inquiries on my credit report?

You may need to provide a letter of explanation for any negative items on your credit report, including missed payments, defaulted loans or repossessions. The letter should include an explanation regarding the negative event, the date it happened, the name of the creditor and your account number.

How often does an underwriter deny a loan?

3. The Loan-To-Value Ratio (LTV) Is Too High. LTV compares your mortgage balance to the value of the home. When buying a house, your LTV is brought down by your down payment.

Do loan officers and underwriters work together?

An underwriter determines whether you qualify for a loan and how much the lender will loan to you. In-house underwriting means that the loan officer and the underwriter work together for the same company under the same roof. Their close physical proximity makes the process go faster and more smoothly.

How do you explain a large deposit to a mortgage?

For a Conventional Loan, a large deposit is defined as a single deposit that exceeds 50% of the total monthly qualifying income. With an FHA Loan, a large deposit is a deposit amount that exceeds 1% of the property sales price.