FHA Loan With Unsatisfied Judgment And Tax Lien
This BLOG On Qualifying For FHA Loan With Unsatisfied Judgment And Tax Lien Was Updated And Published On January 24th, 2020
FHA Loans are the most popular loan program in the United States.
- HUD, the parent of FHA, promotes homeownership for home buyers with prior bad credit
- Homebuyers can qualify for FHA Loans with outstanding collections, charge offs, judgments, tax liens with 3.5% down payment
- Most lenders have overlays on FHA Loans with unsatisfied judgment and tax lien
- Borrowers can qualify for FHA Loans with credit scores down to 500
Gustan Cho Associates NMLS 1657322 are direct lenders with no overlays on government and/or conventional loans. In this article, we will cover and discuss FHA Loan With Unsatisfied Judgment And Tax Lien.
Agency Guidelines Versus Lender Overlays
Lenders with overlays will not want to proceed with the mortgage application process until the unsatisfied judgment and/or tax lien has been paid by the borrower and recorded.
- However, there are lenders where they will allow borrowers to pay the judgment and/or tax lien at or prior to closing and have it recorded
- The second option is to have a written payment agreement with the judgment creditor and/or the IRS and have three months of payment seasoning
- The reason being is because the unsatisfied judgment can transfer into the home the buyer is buying
- Any assets owned by the judgment debtor can be lien by the judgment creditor
- However, there are lenders who will approve borrowers for FHA Loan with unsatisfied judgment and tax liens
This holds true as long as they have a written payment agreement or are willing to pay it off at closing and have the title company record it.
FHA Loan With Unsatisfied Judgment With Written Payment Agreements With Creditors
Some lenders will allow borrowers to qualify for FHA Loan with unsatisfied judgment and tax liens. This can be done as long as borrowers have written payment agreements with judgment creditors and/or the IRS in case of tax liens.
- For example, say a consumer has a $20,000 unsatisfied judgment by ABC Corporation
- The consumer would need to contact ABC Corporation and make a written payment agreement
- If they accept $200.00 a month until the debt is paid off, the consumer must sign an agreement with them and make sure they make those payments timely
- Lenders want to see a minimum of 3 months of timely payments before borrower qualify
- Sometimes, a lender might want to see more than three months of timely payments like six months of timely payments
- All payments should be made with checks
- This is because lenders will want to see canceled checks
Lenders might want to see canceled checks as proof of payment and/or three months’ bank statements.
Qualifying For FHA Loans With Tax Liens
Home Buyers can qualify for FHA Loans with Tax Liens as long as they do the following:
- Pay off the federal tax debts they own and get the tax lien released by the IRS
Enter into a written payment agreement with the IRS:
- Make three months of timely payments
- Need to provide three months of canceled checks and/or bank statements
- Needs to show timely payments to the IRS
How To Get Rid Of Judgments To Qualify For FHA Loan With Unsatisfied Judgment
The only way you can get rid of a judgment is by the following :
- Filing bankruptcy
- Paying the unsatisfied judgment
- Settling with the judgment creditor
- By the statute of limitations
- Statute of limitations vary from state to state but most states’ statute of limitations is 10 years
- The judgment creditor has the option in most states to renew the statute of limitations for an additional ten years
- Personal bankruptcy will wipe out all judgments that are civil and issued by government agencies such as the IRS
The good news is that mortgage applicants can qualify for FHA Loan with unsatisfied judgment and tax liens.