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Mortgage Loan With Judgment Lending Guidelines

Gustan Cho Associates
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Mortgage Loan With Judgment Lending Guidelines

This BLOG On Mortgage Loan With Judgment Lending Guidelines Was PUBLISHED On June 9th, 2019

Mortgage Loan With Judgment
Gustan Cho Associates

Advice In Qualifying For Mortgage Loan With Judgment:

Home buyers can qualify for a mortgage loan with judgment:

  • This holds true as long as they have a written payment agreement with the judgment creditor
  • Borrowers need to have made at least three monthly payments to the judgment creditor and can provide three months canceled checks to the mortgage underwriter
  • Some lenders with mortgage lender overlays
  • They will require that you pay off a judgment that is on your credit report before they will approve you for a mortgage loan with judgment

In this blog, we will discuss qualifying for a Mortgage Loan With Judgment Lending Guidelines.

Written Payment Agreements And Payment Seasoning

Written Payment Agreements And Payment Seasoning
Gustan Cho Associates

You can still qualify for a mortgage loan with judgment but only if you have a payment arrangement with the judgment creditor.

  • The payment arrangement needs to be seasoned for at least three months, preferably for six months or more
  • You cannot just enter into a written payment agreement with the judgment creditor and pay the three months of payments upfront and qualify for a mortgage loan with judgment

Lenders want to see at least three months of payment history.

Mortgage Loan With Judgment On Credit Report

Mortgage Loan With Judgment On Credit Report
Gustan Cho Associates

Don’t pay off your judgment until you have consulted with your mortgage broker.

  • Paying off outstanding collections and/or judgments will cause a decrease in your credit scores
  • You can still get approved contingent upon paying off the judgment prior to closing

Consult with your mortgage broker as to when you need to pay off your judgment.

Mortgage Underwriters And Judgment On Credit Report

Mortgage Underwriters And Judgment On
Gustan Cho Associates

Paying off the full judgment amount is not required by the mortgage lender.

  • You can settle the judgment and as long as you have a release of the judgment that is all the lender will require
  • For example, if you have a judgment for $10,000 and you settled it for $2,000, that is alright with the lender as long as you have a satisfaction paid in full letter and release from the judgment creditor

Payment Plan With Judgment Creditor

Payment Plan With Judgment Creditor
Gustan Cho Associates

In the event, if you have a payment plan with the judgment creditor, the mortgage lender will want to see proof of the payment agreement and proof of payment via canceled checks.  The longer the payment plan has been seasoned, the more favorable it will look for the mortgage loan borrower.

  • I get asked many times from borrowers if the lender will consider the home in default if they stopped payment on their judgment payment plan after the homeowner closes on their home purchase
  • The answer is no
  • After you close on your mortgage loan, the mortgage lender is done with your credit and financial requirements
  • It is up to you to make your monthly bill payments on time

The mortgage lender is not concerned about which bills you are late on or whether you pay them at all.  The only payment the mortgage lender is concerned with is your mortgage payment and that the home is insured and property taxes paid.

Related> Can You Qualify For Home Loan With Judgment?

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