Mortgage Guidelines On Judgments To Qualify For Home Loans

This Article Is About Mortgage Guidelines On Judgments To Qualify For Home Loans

Mortgage Guidelines On Judgments are similar on all loan programs. Borrowers can qualify for a home mortgage with outstanding judgments under the following conditions. The judgment needs to be paid either by a settled amount or in full and recorded. Or the judgment needs to be in a written payment agreement with the judgment creditor and three months of monthly payments need to be paid. Proof of payment either by three months of canceled checks and/or three months of bank statements need to be provided to the lender. You cannot pre-pay three months ahead of time so you can qualify for a mortgage. At least three months of seasoning is required.

Home Buyers can qualify for home loans with outstanding judgments per Mortgage Guidelines On Judgments without paying the entire outstanding judgment off in full. Per Mortgage Guidelines On Judgments, borrowers can qualify with a written payment agreement and three months’ proof of timely payments to a judgment creditor. FHA, VA, USDA, Non-QM, and Conventional Mortgage Guidelines On Judgments are all the same.

What Are Judgments

A judgment is one of the worst derogatory credit anyone can have when it comes to qualifying for a mortgage. A creditor can sue a debtor if all attempts of collections fail and take them to court. Proper service through a process server and/or county deputy sheriff is required. A creditor normally files a lawsuit in the debtor’s county court. A third-party process server or sheriff needs to serve defendants in person.

Once the defendant is served, they need to appear in court to defend the lawsuit. If the defendant does not show appear in court, the judge will issue a judgment in favor of the creditor. A judgment is issued in favor of the creditor. The judgment creditor can enforce the judgment. They have a certain period of time, depending on the state.

Most states have a ten-year or twenty-year statute of limitations on judgments. The statute of limitations is dependent on each individual state. Judgment creditors can also renew their original judgments for an additional ten to 20 years after the statute of limitations.

How To Settle A Judgment To Qualify For A Mortgage

The only way to get rid of a judgment is the following:

• settle with the judgment creditor for the amount of the judgment
• settle with the judgment creditor for a lesser amount than the face value of the judgment
• enter into a repayment plan with the judgment creditor
• try to get the judgment vacated for improper service
• filing bankruptcy
• Why Don’t All Judgment Creditors Enforce Their Judgments?

All collection accounts and charged-off accounts with outstanding balances have the potentials of becoming judgments. Why don’t all collection agencies sue and get judgments?  The reason is enforcing judgments costs time and money. If the judgment debtor does not have any income and/or assets, the chances are next to nothing for the collection agencies to try to collect. Judgment creditors are selective on who they go after and try to sue and get judgments. If they feel that the debtor has income and assets, creditors will definitely go after the debtor and try to get a judgment on them.

Dormant Judgments Can Always Become Active

Once the judgment creditor is awarded a judgment by the courts they will do their due diligence on whether or not to pursue collection efforts to collect. Defendants with good income and/or has assets are great candidates for judgment creditors. If the judgment creditor gets wind that the judgment debtor is making good income or has assets, chances are they try to enforce their judgment.

Enforcement actions can be by the following:

• by trying to levy on their bank accounts
• investment accounts
• garnish their wages
• lien properties

However, if the judgment debtor has no income or assets nor property, then there is nothing that the judgment creditor can do. Enforcement of a judgment can be quite costly. Judgment debtors with no income or assets are deemed as being judgment proof. This means not collectible. Many judgments just lay dormant until the statute of limitations expires.

Mortgage Guidelines On Judgments To Qualify For Home Purchase

Home Buyers can get qualify for home loans with judgment. Need to have a written payment agreement with the judgment creditor in place. Have at least a three-month payment history. Need to provide three months’ worth of canceled checks and/or bank statements paid to the judgment creditor. The payments need to make sense. For example, borrowers with a $5 million dollar judgment and are making a $10 per month payment, that will not fly.

Here is a case scenario on how borrowers with judgments will qualify for a mortgage:

• $3,000 judgment
• are making $100.00 per month payment to the judgment creditor
• have a written payment agreement in force
• been making payments to judgment creditor for the past three months
• can prove it by providing the mortgage underwriter with three months of canceled checks
• If the above steps are followed, borrowers will qualify for a mortgage

For those who have multiple large judgment amounts, consult with a bankruptcy attorney because filing bankruptcy may be the best option if creditors will not accept payment agreements

Will Bankruptcy Wipe Out My Judgments?

All judgments are not wiped out in bankruptcy. Judgments by governmental agencies are not exempt from discharge and cannot be discharged in a bankruptcy. Judgments that fraud is alleged cannot be exempt from bankruptcy either. Child support, alimony, student loan, government loans, and tax lien judgments cannot be included in the bankruptcy. All other judgments can be included in a bankruptcy and most often can be wiped out. Home Buyers who need to qualify for a mortgage with judgment with a lender with no mortgage lender overlays, please contact us at 800-900-8569. Text for faster response. Or email us at gcho@gustancho.com.