Friday, June 15, 2007

query: motivation letter to underwriter for loan

Not a title insurance issue but it takes me back to my underwriting days of yore so I'm gonna help.

A real mortgage underwriter- one not swayed by kickbacks, gifts, or conflicts of interest - is weighing risk. Part of the risk assessment is your willingness and ability to repay the debt. It's those two items you must address in your letter.

I presume the normal documentation for loan approval has the underwriter on the fence so your letter is a chance to spin the argument in your favor and perhaps gain loan approval.

Remember, mortgage loan underwriters have heard a million sob stories. Sobbing and "oh, woe is me" stories won't cut it unless you have some kind of unusual and overwhelming circumstance beyond your control AND you can demonstrate that you recovered from the obstacle sufficiently to perform under the repayment terms of the loan. Talk about how the situation has been rectified so that moving forward, you'll be responsible.

Willingness to repay is little more tricky. Willingness is self-evident when the borrower has a reliable credit record combined with sufficient income. I presume you are weak in one of those areas. Your job in the letter to is demonstrate an overwhelming motivation to preserve and protect the project for which you are borrowing. Does something really important to you fully depend on the loan? Circumstances are always unique but if you can clearly help the underwriter understand that this is a case of NEED and not just WANT and that you are fully committed and highly unlikely to walk away, you have a marginal chance of a positive response.

A good underwriter makes their decision based upon the facts. A good underwriter knows it's not safe to rely on motivational letters from prospective borrowers, SO the odds are against you. BUT, it never hurts to try. Good luck!

3 comments:

Gideon Mumeson Tebid said...

Very helpful. tart and to the point.

Anonymous said...

Thanks so much. I am in the process of writing this very letter. We do have an overwhelming desire to the home this loan will be linked to and I wasn't sure whether or not to include emotional pull in the letter.

You were inspirational and we sincerely appreciate it!

Diane Cipa said...

You are very welcome. ;)