Qualifying For Mortgage With Judgment On Credit Report

This BLOG On Qualifying For Mortgage With Judgment On Credit Report Was Updated On May 9th, 2017

Judgment on credit is the most negative credit item you can have. Home buyers can qualify for mortgage with judgment credit report.

  • A judgment is when a judge rules in favor of the creditor and rules that you are obligated to pay the judgment the judge issues. 
  • The courts do not enforce the judgment. 
  • It is up to the creditor to enforce the judgment and needs to go through the proper channels in collecting the judgment. 
  • The creditor has many options on how to go about enforcing the judgment. 
  • However, the judgment debtor needs to have assets in order for the judgment creditor to be able to enforce the judgment. 
  • For example, if the judgment creditor finds out that the judgment debtor has assets in his or her bank accounts, the judgment creditor can try to go after the assets in the bank account by getting a court order through the courts. 
  • If the judgment creditor does not have any liquid cash but has assets such as cars, jewelry, real estate, the judgment creditor can try to place a lien on the judgment debtor’s assets. 
  • Borrowers can qualify for mortgage with judgment on credit report.
  • If the judgment debtor has no assets, there is nothing a judgment creditor can do to collect. 
  • In the event if the judgment debtor has no assets, the judgment debtor is considered judgment proof which mean uncollectible.

Statute Of Limitations On Judgments

Statute of limitations is the period where a judgment creditor has to try to collect and enforce the judgment.

  • A judgment is in a consumer’s credit report for a period of 7 years from the judgment issue date. 
  • The judgment is deleted off the credit report after 7 years from the judgment issue date. 
  • However, just because the judgment is off one’s credit report does not mean that the judgment is not valid. 
  • Each state has different statute of limitations on judgments. 
  • Most states have statute of limitations of 10 years from the judgment issue date, however, a judgment creditor can renew the judgment for another 10 years if the judgment creditor files the right extension paperwork. 
  • Most judgment creditors do not renew old judgments but it is the right of the judgment creditor to renew an old judgment when it nears the statute of limitations period. 
  • The only way of getting rid of a judgment is by settling with the judgment creditor or by filing for bankruptcy.

Collection Accounts

All collection accounts can turn into potential judgments.

  • If a collection agency gets wind that a person has assets or good stable income, they may try to pursue in suing you and try to get a judgment against them.
  • If borrowers have a collection agency that is aggressively pursuing them, it may be best to consumers to try to settle with them instead of getting a judgment entered.

Qualifying For Mortgage With judgment On Credit Report

Fannie Mae and Freddie Mac, the two mortgage giants who are in charge of conventional mortgage lending guidelines, have strict lending guidelines when it comes to judgments.

  • Borrowers cannot qualify for a conventional mortgage with judgment on credit report.
  • All judgments against borrowers needs to be paid off or borrowers need to enter into a written payment agreement and make 3 months of payments.
  • The United States Department of Housing and Urban Development, HUD, the parent of the Federal Housing Administration, FHA, will permit home buyer with outstanding judgment on credit to qualify for a mortgage with judgment on credit report as long as a written payment agreement have been established and three months of payments has been made to the judgment creditor. 
  • Three months of canceled checks needs to be provided. 
  • Those having outstanding judgment on credit report who do not intend in filing bankruptcy should set up a written payment agreement with their judgment creditors and start making payments if they want to qualify mortgages.

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