How to get a mortgage with Judgement on my credit report?
Most homebuyers and homeowners are unaware that FHA and VA loans allow bad credit mortgage applicants with judgments to purchase or refinance a home!
The FHA or VA mortgage lender must determine if the Judgment On Credit Report was a result of:
- The FHA mortgage applicant’s disregard for financial obligations;
- The FHA mortgage applicant’s inability to manage debt; or
- Extenuating circumstances beyond the mortgage applicants control.
The FHA / VA mortgage lender must provide the following documentation:
- The evidence of payment in full, if paid prior to settlement;
- The payoff statement, if paid at settlement; or
- The payment arrangement with the creditor, if not paid prior to or at settlement, and a subordination agreement for any liens existing on the title.
A Judgment On FHA / VA mortgage applicants Credit Report is considered resolved if the FHA / VA mortgage applicant has entered into a valid agreement with the creditor to make regular payments on the debt, the FHA /VA mortgage applicant has made timely payments for at least (3) three months of scheduled payments and the Judgment On Credit Report will not supersede the FHA-insured mortgage lien. The FHA mortgage applicant CANNOT prepay scheduled payments in order to meet the required minimum of three months of payments. The payment amount in the agreement must be included in the FHA mortgage applicant’s monthly liabilities and debt. The lender must obtain a copy of the agreement and evidence that payments were made on time in accordance with the agreement.
Judgment On Credit Report refers to any debt or monetary liability of the FHA mortgage applicant, and the FHA mortgage applicant’s spouse in a community property state unless excluded by state law, created by a court, or another adjudicating body. The FHA / VA mortgage lender must verify that court-ordered Judgments are resolved or paid off prior to or at closing. Judgments of a non-borrowing spouse in a community property state must be resolved or paid in full, with the exception of obligations excluded by state law. For manually underwritten loans, regardless of the number of outstanding Judgments, the lender must also determine if the Judgment On Credit Report was a result of: