Mortgage With Outstanding Judgments Lending

Mortgage With Outstanding Judgments Lending Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

This Article Is About Mortgage With Outstanding Judgments Lending Guidelines

Judgments are the worst derogatory items anyone can have on their credit report when it comes to qualifying for residential mortgage loans. However, homebuyers can qualify for a mortgage with outstanding judgments without having to pay off the outstanding judgments in full. Judgments normally do not go away. Most judgments are valid for 10 to 20 years depending on the state a court issued the judgment. However, judgment creditors can renew judgments for another 10 to 20 years. Judgments need to be paid or can get discharged through bankruptcy. Consumers can negotiate a settlement amount with the judgment creditor and if both the consumer and judgment creditor agree on the settled amount, the judgment can be cleared. A judgment is considered settled and free of liability if the judgment creditor files for a release of judgment from the court the judgment was issued.

Mortgage borrowers can qualify for a home mortgage if they have a written payment agreement with the judgment creditor and have been paying on the judgment for at least three months.

Qualifying For Government And Conventional Loans With Outstanding Judgments

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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 with the judgment creditor and qualify for mortgages.

Home Loan With Judgment

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. The 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 to 20 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 to 20 years more than once.

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 does not respond to the subpoena, the judge normally issues a judgment against the recipient in favor of the judgment. creditor.

The judgment is then recorded and becomes part of the public record. A judgment can fall off the credit report in 7 years. However, the outstanding judgment will get discovered when homebuyers apply for a mortgage through a third-party national public records search. All lenders will do a national public records search through Lexis Nexis, Data Verify, or other third-party public records services and all public records will be revealed. Therefore, judgments will get discovered by lenders whether it shows on consumer credit reports or not. It is best to disclose to your loan officer that you have a judgment that does not show up on your credit report before applying for a mortgage.

How Long Do Judgments Report On Credit Bureaus

It is reported to all three credit reporting agencies:

  • Transunion
  • Experian
  • Equifax

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

Mortgage With Outstanding Judgments: 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, the 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

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 debtors 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?

Bankruptcy Will Get Rid Of Most Judgments

Consumers can settle on judgment with the judgment creditor. The older the judgment is, the more likely the 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

Bankruptcy is a debt collector’s worst nightmare. Bankruptcy will wipe out judgments unless the judgment creditor claims a fraud claim. If consumers have multiple judgments, maybe 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.

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

All 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.

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 the 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 the 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 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates have helped countless borrowers with outstanding judgments and tax liens. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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