Letter of Explanation for Overdraft Fees to Underwriter

If your mortgage application is in process and you have to provide your bank statement of 6 to 12 months to the underwriter, you will have to give lots of explanations depending on what objectionable content your bank statement has reflected. 

When the underwriter receives the bank statement, he closely observes the bank statement and then decides whether you are eligible for a mortgage or not. As a matter of fact, it is not easy for the underwriter to decide it right away. So, he will contact you to discuss the overdraft fees that he has seen in your bank statement. Most likely, he will ask you to write a letter of explanation to give the reason for overdraft fees.

Writing the explanation letter for overdraft fees:

Very financially stable and responsible people also have to go through overdrafts at times. The overdraft usually occurs when there is insufficient balance in the account of the applicant or a negative balance. The lender does not like overdrafts because it is an indication that the applicant is not in the position to pay the mortgage. It is the responsibility of the applicant to write the explanation letter and explain everything as to why overdrafts occurred and why he had to pay the overdraft fee.

Format of the letter:

Although the underwriter wants to explain the overdraft fees, it doesn’t mean that he wants you to get into long and complex discussions. The explanation letters which are written in a professional way are usually kept short and concise. There should not be more than two or three paragraphs in the explanation letter. Since you are worried about writing to the underwriter because you are not sure if he will be able to understand your explanation, you are required to stay strong. Many people in that situation start making emotional appeals which never works. The underwriter is only interested in knowing the facts and therefore, you should provide only factual information. 

Some people find it hard to describe everything in the explanation letter when there is a restriction of keeping it short. However, you are required to learn how you will do it successfully. 

Explain the entire situation:

Explaining the overdraft fees to the underwriter is not difficult. Just as you explain one overdraft, you can explain multiple overdraft fees the same way. Sometimes, the explanation is very simple that simplifies everything. For example, if the overdraft fees are due to miscalculation, just give the reason and close the letter. 

However, things become complicated when the explanation of the complex kind needs to be given. For example, the reason behind the missed payment may be a bit complex that needs a bit more information to be given in this explanation letter. 

Tell it won’t happen again:

Sometimes the recipient knows that you are financially stable and you are in the best position to pay the mortgage and therefore, you should make him believe that you are not going to let the overdraft fees appear in your bank statement again.

Although the purpose of the explanation letter is to explain everything regarding the overdraft fee, it has a specific length and therefore, cannot accommodate long details. So, when you have to explain something in more detail, you can meet the underwriter in person or on a phone call to explain things. Below is a sample letter for you.

Sample letter:


Name of the underwriter


Subject: letter of explanation for overdraft fees:

This letter is being written to you to explain the overdraft fees that you have seen in my bank statement. I suffered from a disease due to which, I had to get admitted to hospital for the treatment purpose. Because my treatment was going on, I was not able to work for 2 months. During all this time, I was unable to pay my medical bills. Due to this, I had to pay the overdraft fees.

Now, my financial life has become stable because I have got another job. My employment proofs are attached with this letter. Feel free to contact for any question regarding overdraft fees.


Name of the employer


File: Word (.docx) 2007+ and iPad
Size 18 Kb