Mortgage With Outstanding Judgments Lending Guidelines

Mortgage With Outstanding Judgments Lending Guidelines

This BLOG On Mortgage With Outstanding Judgments Lending Guidelines Was UPDATED And PUBLISHED On November 10th, 2019

Mortgage With Outstanding Judgments
Gustan Cho Team

Judgments are the worst derogatory items anyone can have on their credit report when it comes to qualifying for residential mortgage loans.

  • However, home buyers can qualify for a mortgage with outstanding judgments without having to pay off the outstanding judgments in full

In this article, we will discuss and cover mortgage with outstanding judgments lending guidelines.

Qualifying For Government And Conventional Loans With Outstanding Judgments

Borrowers can qualify for government and conventional loans with the following:

  • Outstanding collections
  • Charge offs
  • Aged late payments
  • Repossessions of automobiles
  • Prior Bankruptcy and/or Housing Event

But borrowers cannot have outstanding judgments without a written payment agreement and qualify for mortgages.

Home Loan With Judgment

What does Home Loan With Judgment mean?

The good news is that borrowers can qualify for a mortgage with outstanding judgments without having to pay the judgment off in full.

  • This is the case only if they have a written payment agreement with the judgment creditor
  • It needs to be into effect and in writing and can show that they have been making at least three months of payments by providing canceled checks and/or bank statements
  • Monthly payment for judgment is calculated as part of borrowers debt to income ratios
  • A monetary judgment is a court order that states the amount of money the debtor owes the judgment creditor
  • It is issued by a judge
  • Most judgments are good for 10 years in most states
  • Need to check the statute of limitations on judgment on the states

In most states, the judgment creditor can renew it for another 10 years.

Judgments: How Do You Get A Judgment Against You?

All judgments are issued by a judge in a court of law.

  • The judgment creditor needs to subpoena you to court
  • Judgment debtors can contest the debt the creditor is suing for
  • It is up to the judge to decide whether a judgment is warranted
  • In the event the recipient of judgment do not respond to the subpoena, the judge normally issues a judgment against recipient in favor of the judgment creditor

The judgment is then recorded and becomes part of the public record.

How Long Do Judgments Report On Credit Bureaus

How Long Do Judgments Report On Credit Bureaus

It is reported to all three credit reporting agencies:

  • Transunion
  • Experian
  • Equifax

Unsatisfied judgments remain on credit report for 7 years from the recorded date.

  • Paid judgments remain on credit report for 7 years from the judgment recorded date and not the payment date
  • After 7 years, it must be removed from the credit report

Enforcement Of Unpaid Judgments

A judgment can be enforced by a judgment creditor within a certain period of time.

  • Each state has its own rules and laws concerning how long a judgment is good for
  • In general, judgments statute of limitations is 10 years from the judgment recorded date
  • Most states allow judgments to be renewed after the first round of  the statute of limitations 

Once consumers get a judgment for a set dollar amount, many states allow judgment creditors to charge interest on the unpaid judgment balance.  The judgment balance can include court fees, attorneys costs, and other third-party charges.

Collection On Judgments

What is the Collection On Judgments

A judgment creditor may choose to hire a third party collection agency to collect and enforce the judgment.

  • The collection agency or law firm may do their own due diligence whether the debtor has any assets
  • If they find out judgment debtor do not have any assets or little to no income, they will classify them as being judgment proof and most likely leave them alone
  • However, if they discover they have assets and have a good income, they most likely will try to enforce the judgment through various means of enforcement
  • Depending on the laws of a particular state, a judgment creditor can garnish wages and freeze bank account and/or asset accounts

The judgment creditor can also lien property and/or assets.

How Can I Get Rid Of Judgment?

Consumers can settle on judgment with the judgment creditor.

  • The older the judgment is, the more likely judgment creditor will settle
  • Before consumers give the settlement amount to the judgment creditor, make sure to get a written agreement that states it is a zero balance

Consumers can also try to get the judgment vacated by claiming they were not served correctly.  This task is often tough but consumers can give it a try.

Bankruptcy Will Get Rid Of Most Judgments

Why Bankruptcy Will Get Rid Of Most Judgments

Bankruptcy is a debt collector worst nightmare.

  • Bankruptcy will wipe out judgments unless the judgment creditor claims a fraud claim
  • If consumers have multiple judgments, maybe a bankruptcy might be the best option

Need to consult a bankruptcy attorney to see if Chapter 7 Bankruptcy is their best option or whether a settlement is.

Qualifying For Mortgage With Outstanding Judgments

Home Buyers can qualify for a mortgage with outstanding judgments without having to pay it off. However, if one decides to negotiate with judgment creditor and negotiate the dollar amount owed for clearing the judgment, they need to get a payoff letter of the judgment. The judgment can be paid at closing of the mortgage. Home Buyers who need to qualify for a mortgage with outstanding judgments with a national direct lender licensed in multiple states with no mortgage overlays can contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com.

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