Example output · Loan Officer AI
What the Letter of Explanation Draft Generator actually produces
Takes the underwriter's condition text and the borrower's verbal explanation, then produces a ready-to-edit borrower-voice letter of explanation, a list of reviewer flags for the loan officer, and a checklist of missing information that must be confirmed before the borrower signs.
- Condition Text:
- Provide a letter of explanation for the three credit inquiries appearing on the borrower's credit report dated 04/15/2025: (1) AutoNation Ford, 03/02/2025; (2) Capital One Auto Finance, 03/02/2025; (3) LendingClub, 03/18/2025.
- Borrower Explanation:
- In early March I was shopping for a car for my wife — we ended up buying a used Honda Civic from AutoNation Ford and financed it through Capital One. The LendingClub one I'm not sure about, maybe it was when I looked into a personal loan to pay for the car down payment but I decided not to move forward with it. I did not take out any new debt other than the auto loan.
- Supporting Documentation:
- Capital One auto loan agreement dated 03/05/2025 showing monthly payment of $312; AutoNation Ford purchase contract dated 03/04/2025; No documentation available for LendingClub inquiry.
- Loe Type:
- Credit Inquiry
[BORROWER NAME] [ADDRESS] [DATE] Re: Letter of Explanation – Credit Inquiries Loan #: [LOAN NUMBER] Dear Underwriting Team, I am writing to explain three credit inquiries appearing on my credit report dated 04/15/2025. In early March, my wife and I decided to purchase a vehicle. I obtained quotes from two auto lenders for financing: AutoNation Ford (inquiry 03/02/2025) and Capital One Auto Finance (inquiry 03/02/2025). We ultimately purchased a used Honda Civic from AutoNation Ford and financed it through Capital One. The Capital One auto loan was funded on 03/05/2025 with a monthly payment of $312. Attached is our Capital One auto loan agreement and the AutoNation Ford purchase contract confirming this transaction. The third inquiry (LendingClub, 03/18/2025) occurred when I explored a personal loan as a potential source for the down payment. After reviewing the terms, I decided not to move forward with that option. No LendingClub account was opened. Except for the Capital One auto loan, I did not take on any new debt. All three inquiries are related to my vehicle purchase decision in March 2025. Thank you for your consideration. Sincerely, [BORROWER SIGNATURE] [BORROWER DATE]
FLAG 1: LendingClub inquiry timing and intent. Borrower states "I'm not sure" about the LendingClub inquiry. This language is vague and may invite underwriter follow-up. Recommend borrower provide a more definitive statement before signature: "I applied for a personal loan in mid-March but was not approved" OR "I applied but declined the offer" — verify which is accurate. FLAG 2: No supporting documentation for LendingClub inquiry. Underwriter may request a credit-bureau dispute letter or LendingClub account statement showing no account opened. Consider proactively requesting this from LendingClub or offering borrower's credit-bureau dispute documentation. FLAG 3: Down-payment sourcing. LOE confirms the vehicle was financed through Capital One but does not address whether the down payment came from borrower's own funds or gift funds. If gift funds, the down-payment sourcing may be subject to separate gift-letter requirements for the mortgage. Clarify with borrower.
(1) Borrower confirmation: Was the LendingClub inquiry the result of a denied application, a declined offer, or an incomplete application? Current language "I'm not sure" is vague and should be clarified before signature. (2) LendingClub documentation: Request borrower attempt to obtain a copy of the LendingClub decline or application status letter to demonstrate no account was opened. If unavailable, note in LOE that "no LendingClub account was established." (3) Down-payment sourcing for vehicle: Did the down payment for the Honda Civic come from borrower's own funds or from gift funds? If gift funds, determine whether separate gift-letter requirements apply to the mortgage application. (4) Capitalization One auto loan payment verification: Confirm the $312/month payment schedule with recent auto-loan statement to ensure accuracy in the LOE.
Replace the borrower explanation with what your borrower actually told you, paste in the exact condition text from the underwriter, and list whatever supporting documents are in the file — the tool handles the rest for any LOE type (deposits, employment gaps, name variations, etc.).
Human review: Verify every factual claim in the draft against the actual loan file before the borrower signs — do not submit an LOE to underwriting based solely on this output without confirming the flagged borrower-confirm placeholders and resolving all missing documentation items.
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