Can I Qualify For Mortgage Loan With Unsatisfied Judgment?

This BLOG On “Can I Qualify For Mortgage Loan With Unsatisfied Judgment” Was UPDATED On June 18, 2017

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.

How To Qualify For Mortgage Loan With Unsatisfied Judgment

Mortgage Borrowers can qualify for 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 needs to be made to 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 mortgage loan with tax lien with a written payment agreement and three months on time monthly payments
  • The above qualification requirements on qualifying for mortgage with tax lien applies to tax liens of all jurisdictions: City, County, State, Federal

How Lenders View Judgments

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

  • Judgments is probably the worst credit item
  • The majority of the lenders will lend without any problems to folks who filed bankruptcy, and has 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 judgment debtor and judgment creditor
  • 3  months of timely payments is required before borrowers with judgments can qualify for FHA Loans 
  • Home Buyers with judgments should address issue as soon as possible

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 and 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 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 mortgage loan with unsatisfied judgment, please contact us at 800-900-8569 or email us at gcho@gustancho.com.

Gustan Cho, NMLS ID 873293
The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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