How do I write a Letter of explanation for overdraft fees?
Rachel Davis
Updated on January 21, 2026
A letter of explanation should be short and professional, encompassing two to three paragraphs. The underwriter is only interested in the facts, so avoid unnecessary details and emotional appeals. You actually only need to include a few bits of vital information to create a satisfactory explanation.
How do I write a Letter of explanation for a mortgage?
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.
What is a lox Letter?
A Letter of Explanation (“LOX” or “LOE”) is a formal written statement that explains a certain situation, such as receiving a gift or credit inquiries. If an Underwriter requests a situation to be explained, a LOX is the most common way to accomplish this.
Why do underwriters ask for letters of explanation?
An underwriter may request a letter of explanation from you if they’re unsure about something they see. They might simply need clarification or more information about your credit report or bank statement. Letters of explanation are requirements from secondary authorities that own or back the loan in many cases.
What should a letter of explanation look like?
The letter should include an explanation regarding the negative event, the date it happened, the name of the creditor and your account number. It should also include an explanation of why you don’t see this problem happening again.
Why do you need a letter explaining late payments?
Explaining a couple late payments could mean the difference between a good interest rate and a fair one. The basic premise of this explanation letter is to address: The situation you were in which caused you to pay late was beyond your control.
When do you need a letter of explanation?
You may also have to provide a letter of explanation in situations such as: 1 if you had a late payment on your house 2 if you had a late payment on your rent 3 if you have a joint account with another person 4 if you’re filing for bankruptcy 5 if you had a huge deposit on your savings account recently
How to write a letter of explanation for a loan?
Begin the letter with the date, a salutation, and an introduction of the incident or issue. Provide a short but detailed description without having to add unnecessary terms and phrases. Provide an explanation of the steps you’ve taken to rectify the error or to complete the missing information. Highlight your current situation using only the facts.
What to include in an explanation letter to an underwriter?
For instance, if the underwriter asks why there was a significant amount deposited in your account recently, you can explain that it came from your car’s sale. Along with the letter, you can include the sales receipt and other documentation which will support the contents of your explanation letter.
