FHA Guidelines On Judgment And Other Outstanding Public Records

This BLOG On FHA Guidelines On Judgment And Other Outstanding Public Records Was UPDATED On July 19, 2017

A judgment is one of the worst derogatory items one can have on their credit report. FHA Guidelines On Judgment permit FHA Borrowers to qualify for FHA Loans with outstanding judgments. However, under FHA Guidelines On Judgment, borrowers need a written payment agreement and three months payments to the judgment creditor. Judgments are issued by a judge in the creditor’s favor for an set amount against the judgment debtor.

  • Mortgage loan borrowers can qualify for home loan with judgment.
  • The creditor is known as the judgment creditor. 
  • A judgment is probably the worst thing you can have on credit.
  • Collections and collection accounts can all lead to judgment accounts if creditor pursues to sue.
  • It is up to the creditor to see how far they want to take the collection and charge off account.
  • The only way to get can get rid of a judgment without paying is by filing bankruptcy.
  • The good news is that a mortgage loan borrower can qualify for FHA home loan with judgment as long with written payment agreement with the judgment creditor.
  • The judgment debtor needs to pay the judgment creditor for at least three months.
  • Payment to the judgment creditor  for three months cannot be paid in advanced.

Vacating A Judgment

There are ways of vacating a judgment by filing an appeal. But this needs to be done quickly after the judgment has been issued. Excuses to have judgments vacated are not receiving proper service. Borrowers can qualify for FHA Loans under FHA Guidelines On Judgment.

  • Consumers can also negotiate with the creditor if they are willing to settle for a smaller amount of the judgment.
  • Appealing the judgment to have the judgment vacated is rather difficult and time consuming.
  • Mortgage borrowers who are looking for a home loan with judgment needs to realize that trying to vacate a judgment can take some time.

How Long Does Judgment Stay On Credit Report?

A judgment will stay on credit report for a period of 7 years from the judgment issue date.

  • Most judgments are good for a period for ten years but depends on state and statute of limitations on state judgment was issued.
  • However, the judgment creditor can renew it for another ten years. 
  • Consumers are considered judgment proof if they have very limited income and no assets. 
  • Judgment proof means that the judgment creditor is not able to collect any money or assets.
  • For those who are applying for home loan with judgment can do so and pay the judgment off prior to closing or at closing.

Can I Get Mortgage If I Have Judgment Or Do I Need To File Bankruptcy?

Most mortgage lenders will not lend on mortgage loan borrowers who have outstanding judgments. However, FHA Guidelines On Judgment allows borrowers to qualify for FHA Loans with judgments.

  • My advise is to consult with a mortgage lender who specializes in bad credit mortgage loans. 
  • The Gustan Cho Team can approve mortgage loans for mortgage loan borrowers with a prior unsatisfied judgment as long as they have a written payment plan and have been paying on the judgment for three continuous months. 
  • Cancelled checks, bank statements, and the judgment repayment plan agreement need to be provided.

When Do I Have To Pay Off Judgment Prior To Mortgage Closing

If mortgage lender requires to pay off the judgment as part of the conditional mortgage approval, borrowers can pay off the judgment prior to closing or in some cases, at closing.  Proof of funds will be required and a judgment release will be required as well along with cancelled checks. Title company can record judgment at closing.

Other Public Records And Credit Report

Credit Repair companies can remove judgments, tax liens, and other public records off credit reports. However, removing collection accounts, late payments, repossessions, and charge off accounts is fine. Nobody can find out about it since they are not public records. However, removing judgments and other public records such as foreclosures, deed in lieu of foreclosures, shorts sales, tax liens will become a problem. All lenders do a national public records search and even though public records are not posted on credit reports, they will find out about it through the public records data base.

To qualify for mortgage loans with outstanding judgments with a lender with no lender overlays, please contact The Gustan Cho Team at 1-800-900-8569 or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.

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.

2 Comments

  1. I AM IN THE PROCESS TO CLOSING AND THEY ASK ME FOR THE SATISFIED LETTER FROM THE COURT I JUST PAID THE JUDGMENTS ON FULL THEY TAKE TIME TO GO TO COURT, DO YOU THINK THEY WILL DENIED THE LOAN BECAUSE I DONT HAVE THE RELEASE FROM THE COURT YET?

    • Gustan Cho says:

      No. As long as you get the release from the judgment creditor, you can have the title company take care of it at your home closing.