VA Loans With Judgments And Tax Liens Mortgage Guidelines

This BLOG On VA Loans With Judgments And Tax Liens Mortgage Guidelines Was UPDATED On January 21st, 2019

VA Loans is the best mortgage loan program in the U.S. Only veteran mortgage borrowers with certificate of eligibility (COE) can qualify for VA Loans. Borrowers can qualify for VA Loans With Judgments and Tax Liens with the following:

  • Have a written payment agreement from the judgment creditor and/or Internal Revenue Service
  • Have at least three months payment seasoning
  • Proof of three months payments needs to be provided to the lender either with three months canceled checks and/or three months bank statements

Or the judgment can be paid off prior or at closing.

Qualifying For VA Loans With Judgments

A judgment is the worst derogatory item you can have besides a bankruptcy or tax liens.

  • Judgments can affect homebuyers in getting VA Loans
  • Gustan Cho Associates has helped veteran borrowers qualify for VA Loans With Judgments
  • Most lenders will not approve VA Loans With Judgments
  • Many lenders have overlays on VA Loans With Judgments and will not lend unless the judgment has been paid off
  • There are a few mortgage lenders that will help veterans qualify for VA Loans With Judgments
  • This holds true if the judgment debtor has entered into a written payment agreement with the judgment creditor and has made at least three months of timely payments

Three months of canceled checks need to be provided to the lender in order for them to consider a mortgage loan approval.

Ways Of Clearing And Vacating Judgments

Consumers who are delinquent on payments to a creditor and the creditor feels like the consumer has assets, the creditor can pursue further collection efforts by suing in a court of law and getting a judge to issue a default judgment against them.

  • Most creditors will charge off debtors and sell bad debt to a collection agency
  • Most likely forget about it after numerous collection efforts
  • But there are creditors and collection agencies that will go that extra mile and try to collect on the bad debt if they feel like they have assets and good income
  • The first step a creditor does is to file a lawsuit in court and need to get served by the county sheriff or process server summoning consumer to court
  • More than 90% of those who get served do not show up to court

The judge then enters a default judgment against the debtor.

How To Clear Judgment

There are three things one can do to clear judgment.

  1. Consumers can request a court hearing to contest the judgment by claiming you were not properly served
  2. Consumers can negotiate with the judgment creditor for an amount less than the face value of the judgment and get a judgment release
  3. Consumers can file bankruptcy and have the judgment wiped away and have no more financial obligations

Bankruptcy is a creditor’s worst nightmare.

Bankruptcy Clears Judgments

We will cover the topic of filing bankruptcy on a different blog, but many folks that have multiple judgments and get their bank accounts and/or wages garnished by judgment creditors should seriously think about filing bankruptcy.

  • I am not an attorney nor am I a bankruptcy expert, but those who do not have many assets but are struggling more so because judgment creditors are garnishing their wages or are on the verge of getting their bank accounts frozen need to seriously consult a bankruptcy attorney
  • Bankruptcy is a get out of debt card
  • Consumers can only use it once every 10 years
  • Just one little judgment, maybe the best thing to do is make payment arrangements

Consumers who have multiple high dollar amount default judgments, bankruptcy may be the best alternative.

VA Guidelines Versus Lender Overlays On VA Loans With Judgments

The U.S. Department of Veteran Affairs does not have any credit score requirements nor any debt to income ratio requirements.

  • Gustan Cho Associates Mortgage Group has no overlays on VA Loans
  • Veteran Borrowers can get 100% financing on VA Loans with no closing costs
  • No monthly mortgage insurance premium on VA Loans
  • No closing costs if veteran home buyer get sellers concessions
  • VA allows up to 4% sellers concessions by sellers to cover buyers closing cost
  • If short on closing costs, the lender can give lender credit in lieu of higher mortgage rate
  • Bottom line, veteran borrowers can purchase a home with zero money out of pocket

Veteran Borrowers can qualify for VA Loans After Chapter 7 Bankruptcy after two years from the discharged date of Chapter 7.  Borrowers can qualify for VA Loans During And After Chapter Bankruptcy. The borrower is eligible to qualify for VA Loans During Chapter 13 one year into a Chapter 13 Bankruptcy Repayment Plan. There is no waiting period after Chapter 13 discharged date to qualify for VA Loans.

How Long Do Judgments Remain On My Credit Report?

Judgments will remain on credit reports for a period of 7 years. But the judgment is normally good for 10 years in most states. The judgment creditor has the option of renewing the judgment after 10 years for another 10 years.

  • Most states have a 10-year statute of limitations on judgments
  • But if a judgment creditor feels that could potentially make money in the future, they can renew it for an additional 10 years
  • Majority of the judgment creditors do not renew the original judgment
  • If they do not renew after 10 years, consumers are now free and clear of the judgment and the judgment creditor cannot come after them

Check on the statute of limitations on debt on the specific state to make sure how long judgments are good for.

Judgment Proof: What Is Being Judgment Proof?

Consumers have several default judgments entered against them but have no assets or limited income, they are considered judgment proof.

  • Consumers who have no money or assets that a judgment creditor can go after, they are out of luck

Having a default judgment is not a crime and a judgment creditor cannot go after something you do not have.

Qualifying For VA Loans With Judgments With Lender With No Overlays

Veteran borrowers who need to qualify for VA Loans With Judgments with direct VA Lender with no mortgage overlays on VA Loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at [email protected] We are available 7 days, evenings, weekends, and holidays.