Consumer Explanation Letter

A consumer explanation letter, also known as a letter of explanation or LOX, is a document that borrowers may be required to provide to explain certain aspects of their financial history or circumstances. The purpose of a consumer explanation letter is to provide additional context or clarification to the mortgage lender regarding specific items or events that may impact the borrower's creditworthiness or loan application.

Key characteristics of a consumer explanation letter include:

Consumer explanation letters can help borrowers address potential concerns or provide necessary context to lenders during the mortgage application process. By providing an explanation and supporting documentation, borrowers can potentially mitigate any negative impact that certain items in their financial history may have on their creditworthiness assessment.