Use Word's AI to Draft Underwriting Letters and Narratives

What This Does

Word's built-in Copilot AI drafts adverse action notices, exception request narratives, and underwriting summary letters from a brief description, eliminating the blank-page problem for complex written communications.

Before You Start

• Copilot access on your account (most organizations buy the Microsoft 365 Copilot add-on; smaller ones may have free basic access; ask IT if you're not sure)
• Word desktop app or Word on the web (word.office.com)
• Know the key facts of the letter you need to write (denial reasons, exception details, etc., no actual borrower PHI needed for templates)

Steps

1. Open Word and create a new document

1. Open Word and click New blank document
2. Look for the Copilot icon in the lower-right corner of the document, or the on-canvas Draft with Copilot icon at the top of a blank document. Microsoft moved Copilot off the Home ribbon in 2026, so the corner button replaces the ribbon button (press F6 to reach it by keyboard, or right-click it and choose Move to ribbon)
3. Click it, and a prompt box appears

What you should see: A text input box with the placeholder "Describe what you'd like to write."

2. Draft an adverse action notice

1. In the Copilot prompt box, type a clear description:

   Write an ECOA/FCRA compliant mortgage adverse action notice. Denial reasons: (1) excessive obligations in relation to income (back-end DTI was 53% vs. 45% guideline maximum), (2) insufficient cash reserves (1 month available vs. 3 months required). Loan type: conventional. Leave blanks for applicant name, address, and application date.

1. Select the Generate arrow. Word generates the full letter
2. Review for accuracy, add your practice letterhead, fill in the blanks

3. Draft an exception request narrative

1. Create a new document and open Copilot
2. Type:

   Write a mortgage underwriting exception request narrative for a DTI exception. Back-end DTI: 47.5% vs. guideline maximum 45%. Compensating factors: (1) credit score 810, (2) 8 months PITI reserves, (3) LTV 62%, (4) 12-year continuous employment at same employer, (5) no prior mortgage delinquencies in 15 years of homeownership. Recommend approval. Structure as: exception requested, applicable guideline, compensating factors, recommendation.

1. Review and refine using the Rewrite button if needed

4. Refine the output

1. After Copilot generates the draft, highlight any section you want to improve
2. Select the text and choose Rewrite from the Copilot options that appear to get different phrasing
3. Use the Copilot panel to ask: "Make the compensating factors section more persuasive" or "Shorten this to 2 paragraphs"
4. When satisfied, save and format with your lender's letterhead template

Troubleshooting: If the Copilot icon doesn't appear, it may not be enabled for your account. Check with IT; most organizations need the paid add-on, but smaller ones may have free basic access.

Real Example

Scenario: A loan was denied for DTI and insufficient reserves. You need to send the adverse action notice today but the blank document has been sitting untouched for 30 minutes.

What you type: "Write a mortgage adverse action notice. Denial for two reasons: excessive obligations in relation to income, and insufficient reserves. ECOA/FCRA compliant. Formal, professional tone. Leave blanks for borrower name and loan number."

What you get: A complete, properly structured adverse action letter with standard ECOA/FCRA language, reason codes, and a statement of the borrower's rights, ready for your letterhead and signature.

Tips

• Keep your lender's adverse action notice template as a Word file: open it, then use Copilot to fill in only the specific reasons and facts, preserving your approved format
• For exception narratives, the first draft is rarely final; use the "Rewrite this section" function to try 2-3 variations, then pick the strongest
• Copilot works best when you give it specific numbers and facts rather than vague descriptions

Tool interfaces change. Word Copilot requires Copilot access on your account. "Draft with Copilot" appears at the top of blank documents in supported versions.