Mortgage Loan With Unsatisfied Judgment Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will discuss and cover qualifying for a mortgage loan with unsatified judgment. Judgments are the worst derogatory credit item any consumer can have. Homebuyers can qualify for a mortgage loan with unsatisfied judgment with a written payment agreement and after making three monthly payments. Unpaid collection and charge-off accounts can turn into judgments if creditors decide to pursue them. Judgments are court orders in favor of the plaintiff or creditor against the debtor. Judgments find the defendant liable for the debt. The judgment creditor can pursue legal avenues to enforce the judgment. Homebuyers can qualify for a mortgage with an unsatisfied judgment.  Mortgage loan with unsatisfied guidelines for FHA, VA, USDA, Fannie Mae, and Freddie Mac allow borrowers to qualify for a mortgage loan with unsatisfied judgment with a written payment agreement.

Difference Between Collection Accounts and Judgments

Unlike any other collections, judgments have a 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 state. 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 the following paragraphs, we will cover and discuss qualifying for a mortgage loan with unsatisfied judgment and getting approved and closed on time.

How To Qualify For Mortgage Loan With Unsatisfied Judgment

Judgment liens are issued by the courts. There are specific steps on the judgment process. The defendant needs to be served. If the defendant cannot be served, creditors use process servers to post notices in the local paper. A court date is assigned. If the defendant does not appear in court, the judge issues a civil 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.

Written Payment Agreement With Judgment Creditor
Written Payment Agreement

There are three choices in qualifying for a mortgage loan with unsatisfied judgment. The three options are the following:

  1. Pay the outstanding full face value of the judgment and the interest
  2. Settle with the judgment creditor for less than the face value of the judgment
  3. Settle with the judgment creditor and negotiate on a written payment agreement

Most people chose option three with getting a written payment agreement with the judgment creditor. Mortgage borrowers can qualify for a mortgage loan with unsatisfied judgment if they have  a written payment plan with 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 have seasoned.

Can I Pay The Three Monthly Payments Required After Signing Payment Agreement In Advance?

As mentioned earlier, you can qualify for a mortgage loan with unsatisfied judgment if you have a written payment agreement with a judgment creditor and have made three monthly payments. 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 an FHA loan with tax lien with a written payment agreement and three months of on-time monthly payments. The above qualification requirements for qualifying for a mortgage with tax lien apply to tax liens of all jurisdictions: City, County, State, and Federal.

How Lenders Underwrite Mortgage Loan With Unsatisfied Judgment?

Agency mortgage guidelines on judgments allow borrowers with outstanding judgments to qualify for government and conventional 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 for bankruptcy and have gotten the judgment include in the bankruptcy. Judgments and Tax Liens need to be addressed prior to or at closing. You cannot qualify for conventional loans with tax liens. You can qualify for conventional loans with outstanding IRS debts but you need a written payment agreement with one months of payment prior to or at closing. FHA loans allows for borrowers with a tax lien qualify for an FHA loan as long as they have a written payment agreement with the IRS and have make three monthly payments.

What Do Underwriters Look For When Analyzing Borrowers With Judgments

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
Deleting Judgments Off Credit Report

Judgments can be deleted from credit reports through credit repair like other derogatory items. However, one thing different between judgments versus other derogatory credit items is that judgments are public records. Even though the judgment is off your credit report, mortgage lenders will find out about the judgment after a third-party national public records search. All lenders go through a 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. It is best to disclose any and all public records that do not appear on your credit report to your loan officer.

Getting Approved For a Mortgage With Bad Credit

Gustan Cho Associates are mortgage brokers licensed in 48 states with over 170 wholesale lenders. The team at Gustan Cho Associates are experts in originating bad credit mortgage loans. We have a national reputation for being able to do loans other lenders cannot do. Late payments, collection accounts, and charge-off accounts are not public records so when lenders run third-party searches, 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 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, in the evenings, on weekends, and on holidays.