Mortgage Loan With Unsatisfied Judgment Lending Guidelines

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Mortgage Loan With Unsatisfied Judgment Lending Guidelines

This BLOG On Mortgage Loan With Unsatisfied Judgment Lending Guidelines Was UPDATED And PUBLISHED On August 27th, 2019

Mortgage Loan With Unsatisfied Judgment
The Gustan Cho Team

Judgments is the worst derogatory credit item any consumer can have. Unpaid collection accounts can turn into judgments if creditors decide to pursue it.

  • Judgments are court orders that finds the debtor liable for the debt and the judgment creditor can pursue legal avenues to enforce the judgment.
  • Unlike any other collections, judgments have longer statute of limitations on debt.
  • Most judgments are good for 10 years in most states.
  • The statute of limitations on judgments depends on each individual states.
  • Once the statute of limitation on judgment expires, the judgment creditor has the right to renew the judgment for another 10 years.  
  • Judgments are public records so even if the judgment is not on credit reports, lenders can find out that a person has a judgment when they do a third party national public records search during the mortgage process.
  • Judgments need to be addressed prior to closing a residential mortgage loan

In this article, we will cover and discuss Mortgage Loan With Unsatisfied Judgment Lending Guidelines.

How To Qualify For Mortgage Loan With Unsatisfied Judgment

How To Qualify For Mortgage Loan With Unsatisfied Judgment

Mortgage Borrowers can qualify for a mortgage loan with unsatisfied judgment under the following circumstances:

  • Negotiate and settle the judgment and pay it prior to and/or at closing and have it recorded
  • Enter into a written payment agreement with the judgment creditor
  • If a written payment agreement has been entered, three months of timely payments need to be made to the judgment creditor
  • Three months of canceled checks/bank statements need to be provided to the lender to show that borrower has made three monthly payments and three months has seasoned
  • Consumers cannot pay three months worth of payments upfront on a written monthly judgment payment agreement and the actual three months term needs to be seasoned
  • Judgments and Tax Liens are under the same classification
  • Borrowers can qualify for a mortgage loan with tax lien with a written payment agreement and three months on-time monthly payments

The above qualification requirements on qualifying for a mortgage with tax lien applies to tax liens of all jurisdictions: City, County, State, Federal.

How Lenders View Judgments

How Lenders View Judgments

FHA Guidelines on judgments allow borrowers with outstanding judgments to qualify for FHA Loans with a written payment agreement.

  • Judgments are probably the worst credit item
  • The majority of the lenders will lend without any problems to folks who filed bankruptcy and has passed.
  • Judgments and Tax Liens need to be addressed prior to or at closing 
  • We require that the judgment debtor ( the mortgage loan borrower ) has entered into a payment agreement with the judgment creditor if the judgment cannot be paid at closing
  • There is no minimum dollar amount that is required on a written payment agreement with the judgment creditor: That agreement is between the judgment debtor and the judgment creditor
  • 3  months of timely payments are required before borrowers with judgments can qualify for FHA Loans 

Home Buyers with judgments should address the issue as soon as possible.

Deleting Judgments Off Credit Report

How Deleting Judgments Off Credit Report

Judgments can be deleted off credit reports through credit repair like other derogatory items.

  • However, one thing different with judgments than other derogatory credit items is that judgments are public records
  • All lenders go through third party national public search through companies like Lexis Nexis, Data Verify or other national public search vendors.
  • All public records will get discovered during a national third-party search.
  • Late payments, collection accounts, charge off accounts are not public records so when lenders run third party search, there is no way of finding out about non-public records national search.

Home Buyers who need more information and/or clarification in getting a mortgage loan with unsatisfied judgment, please contact us at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com.

Gustan Cho, NMLS ID 873293

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