Mortgage With Judgment

Gustan Cho Associates

Guidelines On Refinance With Judgment

A judgment is a ruling by the courts that a debtor is liable for a creditor claim to the debtor’s debt and that the creditor has the green light to go about trying to collect the debtor’s debts through legal means such as wage garnishments, freezing bank accounts, and placing liens on the debtor’s assets.  The courts are not responsible to collect on the debtor’s debt. The creditor needs to go about through the legal system in trying to enforce the judgment such as petitioning for freezing the bank and/or asset accounts of the judgement debtor or petitioning the courts for wage garnishments.  Enforcing a judgment can be quite costly for the judgment creditor and most judgment creditor will not enforce a judgment unless they know that the judgment debtor has assets and income.  If a judgment debtor is insolvent, the judgment debtor is classifed as judgment proof where the debtor has no assets that can be collected.

A mortgage loan borrower can qualify for a mortgage with outstanding judgments.

What Do Lenders Require From Borrowers With Judgments?

A mortgage loan borrower can qualify for a mortgage loan with an outstanding money judgment, however, the judgment needs to either be paid off or there needs to be a written payment agreement with a judgment creditor and three months of payments must have been made with the judgment creditor.  The mortgage underwriter needs to provide three months of canceled checks to the mortgage underwriter.  Some mortgage lender will require six months of timely payments to the judgment creditor and they may need to provide six months of canceled checks.  A judgment is probably the worst credit item that you can have on your credit report.  Judgments is considered worse than bankruptcies on your credit report because with a bankruptcy, all your debts are wiped off while with a judgment, that judgment is a ticking time bomb where anytime your judgment creditor gets wind that you are making good income or have assets, they can turn on the enforcement trigger and go after your assets or can garnish your income.

Collection Accounts And Judgments

You do not have to pay off an unpaid collection account to qualify for a mortgage loan, however, you need to either pay off your judgment or enter into a payment agreement with the judgment creditor if you have a judgment entered against you.  All collection accounts can convert into a judgment if the collection agency decides to proceed with further collection activities.  That is why mortgage lenders will count 5% of the unpaid non-medical collection balance with a total aggregate balance of $1,000 or higher in calculating your debt to income ratios in the event if the unsatisfied collection account will become a judgment.  Non-medical collection accounts do not count and very rarily do medical collection accounts turn into judgments.  Judgments also can give the right for the judgment creditor to place a lien on your property which gives the judgment creditor an interest in your property.

 Refinance With Judgment

On a home purchase mortgage loan, most mortgage lenders will accept a written payment agreement with a judgment creditor as long as you have been making timely payments for three to six months and can provide three to six months of canceled checks paid to the judgment creditor.  On a refinance mortgage, most mortgage lenders will accept a written payment agreement with a judgment creditor as long as you have three to six months payment history and can provide three to six months canceled checks.  However, if the judgment creditor has liened your property, that lien needs to be removed before you are able to refinance your mortgage loan.  You can negotiate with the judgment creditor where you offer them pennies on the dollar on the judgment or set up a written payment agreement and request that they remove the lien off your home.  If you are seeking a refinance loan with a judgment and need to get pre-approved, click APPLY NOW FOR REFINANCE MORTGAGE and I will assist you in refinancing your mortgage loan and assist you with your judgment.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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