Before the application process for the mortgage could be completed, Kirsten asked me to write something called a Letter of Explanation. In this letter, I’m supposed to explain any issues in my credit report. The issues in my case were the late payments I made with property Alpha in 2010, my maxed out credit cards, and the hard inquiry that I did with Empower. This is what I wrote:
This letter is an explanation of any irregularities in my credit report. The first issue is being late on my mortgage payments about 3 years ago with Bank of America, as well as the late payments on my credit cards at the time. During that time, I had my hours cut from full-time worker to part-time as they reorganized the workforce at my job with [bank job security company]. I was also having issues in real estate management. I wasn’t screening prospective tenants very well, and would therefore have bad tenants and all the issues they bring. I also didn’t have a good business model. Whenever a tenant would call, I would hire locals to “fix” the problem. They wouldn’t do a good job, keep the money, and leave the problem as it was or even worse. To supplement for these issues, I maxed out my credit cards until it got to a point where I couldn’t make the minimum payments.
Once I became a full-time employee again, I also took another job and became full-time there as well. I’m currently the senior security officer at both jobs. I started a property management company and now put tenants through a more rigorous background check that all but ensures I get the right tenant for every apartment. My maintenance has improved as well, as I now do inspections every 6 months and have made contacts with the right businesses who fix apartment issues in a professional manner. I plan to apply the same level of professionalism to the property that I’m asking a loan for.
The second issue is with the Empower hard inquiry. I was looking for the best possible loan and applied for a mortgage with Empower. Their program, however, did not fit my business model so I decided not to go with them. I hope this clears up all issues with my credit report. Thank you.
At least that English degree from CCNY was good for something, as Kirsten thought the letter was perfect. And I was honest for the most part. They don't know that "senior security officer" simply means that I'm a shiftless security guard who can keep his mouth shut longer than others. The only thing I lied about was the 6 month inspections. I do one inspection a year, because I know that the more a tenant sees a landlord, the more they’ll remember problems that they were perfectly fine living with and bother me with them. I also left out the cost for chemo at the time, but I think that's my personal business and I don't like bringing that up anyway.
What bothered me was writing the letter. It cuts a bit into my ego when I have to explain to some investor I’ve never met why I am worthy of their money (because CFB Mortgage is a broker, investors will buy the mortgage, not a bank). It’s one thing to go through the application process because I’m simply filling out forms and stuff. But writing a letter? I have to admit that my pride was a little bruised. Oh well. I guess beggars can’t be choosers.
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