Mortgage With Judgment on Credit Report

Getting Approved For Mortgage With Judgment on Credit Report

Gustan Cho Associates are mortgage brokers licensed in 48 states

This guide covers getting approved for a mortgage with judgment on credit report guidelines. Credit judgment is the most negative credit item you can have. However, the good news is that you can still qualify for a mortgage with outstanding judgments if you have a written payment agreement with the creditor. Dale Elenteny, a senior loan officer at Gustan Cho Associates, explains about qualifying and getting approved for a mortgage with judgment on credit report as follows:

Homebuyers can qualify for a mortgage with judgment on credit report. You must have a written payment agreement with the creditor and have made at least three monthly payments.

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. Judgment creditors need to go through the proper channels in collecting the judgment. A judgment creditor cannot go after a consumer with an outstanding judgment if the consumer has no assets. In the following paragraphs, we will discuss getting approved for a mortgage with judgment on credit report.

Enforcing Judgments By Creditors

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The creditor has many options on how to go about enforcing the judgment. However, the judgment debtor needs to have assets for the judgment creditor to be able to enforce the judgment. For example, if the judgment creditor finds out the debtor has assets in his or her bank accounts, the creditor can try to go after the assets in the bank account by getting a court order.

Consumers with outstanding judgments with no assets or means to pay the judgment are considered judgment-proof. Most judgment creditors will not go after people with little to no assets.  If the judgment creditor finds out the judgment consumer has assets, they can enforce the judgment and go after the assets. In this article, we will discuss and cover mortgage loans with outstanding judgments on credit reports.

If the judgment creditor has no liquid cash but assets such as cars, jewelry, precious metals, and collectibles, the judgment creditor can try to place the lien on the asset. Borrowers can qualify for a mortgage loan with a judgment on their credit report. If the judgment debtor has no assets, there is nothing a judgment creditor can do to collect. If the judgment debtor has no assets, the debtor is considered judgment-proof, which means uncollectible.

Statute of Limitations on Judgments

The statute of limitations is the period where a judgment creditor has to try to collect and enforce the judgment. Judgment is in a consumer’s credit report for seven years from the judgment issue date. The judgment is deleted from the credit report seven years after the judgment issue date.

Just because the judgment is off one’s credit report does not mean the judgment is invalid. Each state has a different statute of limitations on judgments. Most states have a statute of limitations ten years from the judgment issue date.

However, a judgment creditor can renew the judgment for another ten years if the judgment creditor files the right extension paperwork. Most creditors do not renew old judgments—the judgment creditor’s right to renew an old judgment when it nears the statute of limitations period. The only way to get rid of a judgment is by settling with the judgment creditor or filing for bankruptcy.

Mortgage With Judgment on Credit Report and Collection Accounts

Mortgage With Judgment On Credit Report And Collection AccountsAll collection accounts can turn into potential judgments. If a collection agency gets wind that a person has assets or a good stable income, they may try to pursue suing you and try to get a judgment against them. If borrowers have a collection agency aggressively pursuing them, it may be best for consumers to try to settle with them instead of getting a judgment entered.

Fannie Mae and Freddie Mac, the two mortgage giants in charge of conventional mortgage lending guidelines, have strict lending guidelines regarding judgments. Borrowers cannot qualify for a conventional mortgage with judgment.  All judgments against borrowers need 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 buyers with outstanding judgment on credit to qualify for a mortgage with judgment on credit report. This holds as long as a written payment agreement has been established. Three months of payments have been made to the judgment creditor. Three months of canceled checks need to be provided. Those having an outstanding judgment on credit reports which do not intend to file bankruptcy should set up a written payment agreement with their judgment creditors. They should start making payments if they want to qualify for mortgages.

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