FHA Guidelines on Judgment and Outstanding Debts

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In this article, we will cover and discuss FHA guidelines on judgment and outstanding debts. A judgment is one of the worst derogatory items one can have on their credit report. FHA guidelines on judgment permit borrowers to qualify for FHA loans with outstanding judgments.

How To Qualify For FHA Loans With Outstanding Judgments

Borrowers can qualify for FHA Loans with outstanding judgments

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 a set amount against the judgment debtor. Mortgage loan borrowers can qualify for a 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 accounts with outstanding balances can all lead to judgment accounts if the creditor pursues to sue.

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How Creditors Pursue Outstanding Collections 

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 settling the judgment, making a written payment agreement, or filing bankruptcy. The good news is that a mortgage loan borrower can qualify for an FHA home loan with judgment as long as they set up a 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 advance. If the borrower settles with the judgment creditor, the borrower needs to get the release of the judgment from the courts.

FHA Guidelines on Judgments: 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 that are often used are claiming you did not receive proper service of the summons.

FHA Guidelines on Judgments: How Can You Qualify For an FHA Loan With Judgments

Borrowers can qualify for FHA Loans with outstanding judgments. Consumers can negotiate with the judgment creditor. Negotiate with the judgment creditor and see if they are willing to settle for a smaller amount of the judgment. If the judgment creditor is willing to settle to clear the judgment, make sure you get everything in writing. Make sure you get the release from the court stating the creditor certifies the monetary judgment has been settled and no other monies are due to the creditor. Save all the paperwork and canceled checks in the event the settled judgment comes and haunts you years later. You never know what can happen in the future.

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How To Vacate a Judgment

Appealing the judgment to have the judgment vacated is rather difficult and time-consuming and can only be done in the earlier months after you get a judgment and not years later. Bankruptcy will vacate all judgments with the exception of the judgment is from a government agency and/or the judgment was the result of fraud. Borrowers who are looking for a home loan with judgment need to realize that trying to vacate a judgment can take some time.

How Long Does Judgment Stay On Credit Report?

Can I Get Mortgage If I Have Judgment

A judgment will stay on the credit report for a period of 7 years from the judgment issue date. Most judgments are good for a period of ten years to twenty years. Depending on the state and statute of limitations on the state the judgment was issued. However, the judgment creditor can renew it for another ten years or twenty 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 because the defendant has no net worth. For those who are applying for a home loan with a judgment can do so and pay the judgment off prior to closing or at closing.

FHA Guidelines On Judgment And Can I Get Mortgage If I Have Judgment

Most lenders will not lend to borrowers with outstanding judgments. FHA Guidelines on Judgment allow borrowers to qualify for FHA Loans with judgments. My advice is to consult with a mortgage lender who specializes in bad credit mortgage loans. Gustan Cho Associates can approve mortgage loans for borrowers with a prior unsatisfied judgment. This holds true as long as they have a written payment plan and have been paying on the judgment for three continuous months. Canceled checks, bank statements, and the judgment repayment plan agreement need to be provided.

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

If the 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 canceled checks. The title company can record judgment at closing.

FHA Guidelines On Judgment And Other Public Records

Credit Repair companies can remove judgments, tax liens, and other public records from 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, deeds in lieu of foreclosures, short sales, and 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 database.

Getting Pre-Approved For an FHA Loan with Bad Credit and Judgments

To qualify for mortgage loans with outstanding judgments with a lender with no lender overlays, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.

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How To Qualify For An FHA Loan with Outstanding Unsatisfied Judgments

Credit Repair companies can remove judgments, tax liens, and other public records from credit reports.

In the following paragraphs, we will discuss and cover FHA loans with judgments. Homebuyers can qualify for FHA loans with outstanding judgments under certain conditions at Gustan Cho Associates. Judgments can be a deal-breaker when it comes time to apply for a mortgage.

The good news is those homebuyers with outstanding judgments can qualify for FHA loan with judgments if they do the following:

  • Negotiate on a settlement
  • Pay the judgment less than the face value if the judgment creditor is willing to sign a release
  • The older the judgment is, the more likely the creditor will be willing to settle
  • Or, enter into a written payment plan
  • The agreed payment will be used as a monthly debt and used to calculate debt to income ratios
  • There is a three-month seasoning requirement with payment agreements with judgment creditors
  • The borrower needs to provide three month’s bank statements and/or canceled checks that have been paid to the creditor
  • Borrowers cannot pay the three month’s in advance in order to qualify for a mortgage

The amount of judgment does not matter. As long as the borrower has a written payment agreement with the judgment creditor and has made three consecutive timely monthly payments, they can qualify for an FHA loan with judgments.

How Long Are Judgments Valid

Judgments are the worst derogatory credit items anyone can have. The statute of limitations on judgments varies from state to state:

  • Most states have a statute of limitations of 10 go 20 years on judgments
  • The judgment creditor can renew the judgment for another 10 to 20 years
  • It is up to the judgment creditors whether to renew their civil judgments after the judgment expires
  • However, judgment creditors with larger judgment amounts normally renew the judgments

But every judgment creditor has a right to renew the judgment at least once for 10 or more years depending on the state.

Qualification Requirements On FHA Loan With Judgments

A  Judgment is when a judge finds the creditor in favor and consumers in default on a lawsuit filed by a creditor. The judgments will be formally recorded and it can be enforced. The judgment also becomes a public record. Judgments will be searchable by future creditors and lenders. Can affect borrowers of loans, especially mortgages. It is not up to the court to collect on judgments but up to the creditors. Creditors can enforce judgments and take the debtor to court. A judge can order a freeze or wage garnishment if creditors enforce the judgment. Most judgments are listed on consumer credit reports.

Judgments Not Recorded On Credit Reports

There are times when a judgment is not on a credit report. There are many credit repair companies that will delete judgments from a consumer credit report.. But just because it has been deleted, it still remains on public records. All lenders will do a third-party national public records search through vendors like Lexis Nexis or Data Verify. Judgments will get discovered. It is best to prepare to take care of this issue before proceeding with the mortgage process. Borrowers can qualify for FHA loans with outstanding judgments.

Choosing Lender With No Overlays On Judgments

The best plan of attack is to consult with no overlay lenders like Gustan Cho Associates who will work with borrowers with outstanding judgments. Some lenders may require that the judgment gets paid off prior to closing while others will accept the payoff at closing and record it as satisfied by the title agent. Borrowers can qualify for FHA loans with judgments. This holds true as long as they have a written payment agreement and has three months of payment seasoning. The mortgage underwriter will review the borrowers’ whole financial situation to determine if there is a pattern of bad credit history or if this was nothing but a fluke.

Effects of the Judgments On FICO Score

How Long Are Judgments Valid

Judgments that are just reported on credit reports will definitely have an impact on credit scores. However, as the judgment on credit reports ages, it will gradually have a lesser impact and after the judgment is two years old, it will hardly affect one’s credit scores. Judgments remain on credit reports for seven years from the date it was posted.

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FHA Guidelines on Judgment: Getting Approved For FHA Loan By Satisfying Judgments

Remember that judgments are the worst derogatory item that anyone can have. Outstanding judgments are like cancer. Judgments can remain dormant for a while. Once the creditor decides to enforce it, the debtor can get wage garnishments, bank and/or asset levy, or liens on their homes and/or other assets.

FHA Guidelines on Judgment: Qualifying for an FHA Loan With Unpaid Judgments

When homebuyers decided they are planning on buying a home, consult with a loan officer as soon as possible. Do not wait until you have paid off the judgment or entered into a payment plan. There may be other issues so most loan officers will work with borrowers and advise them well ahead of time at no cost. Contact us at Gustan Cho Associates to get qualified for an FHA loan with judgments at 262-716-8151 or text for a faster response. Or email us at [email protected] The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays to take your mortgage inquiries.

FHA Guidelines on Judgment and Qualifying for an FHA Mortgage Now!!!