Conventional Loan With Spouse's Judgement

Anonymous · ‎07-08-2015

Hello,

I recently discovered my wife has a $6,000 judgement on her credit report for a citi bank credit card 4 years ago. We never

received any notice of this and only discovered it when pulling her credit report. I have since learned that because we live in the community

property state of Texas citi bank can garnish money from my personal savings/checking account. I'm considering moving my money

to an online bank in hopes I can continue saving for a down payment of 20%. Due to my credit being much better than my wife's, I

plan on trying to get a conventional home loan in my name only. Its my understanding my wife will have to be on the deed, will the title

company see this judgment for my wife and will this hold me up from purchasing a house for us? How should I proceed? I plan on working

something out with Citi Bank after we are in our house. Any help is appreciated.

frugalQ · ‎07-09-2015

I beleive your wife's debts will be counted towards your DTI. if there is an outstanding judgement, the lender may require the judgement to either be satisfied or have some sort of payment plan set up.

it may work to the both of your advantages to start now with either getting the judgement removed (vacated) or negotiate pay for a lesser amount. you do not want her judgement to come back and bite you in the behind while in the middle of getting approved for a home.

good luck!!

StartingOver10 · ‎07-09-2015

Work with Citibank now, before you start shopping for a mortgage. Once you start getting mortgage lender pulls, the judgment holder will be much less negotiable.

Right now is the time to offer a settlement. Don't discuss that you plan to buy a house or they will stick it to you in extra fees and interest. You can negotiate judgments. Just make sure you get a Satisfaction recorded once it is paid so this judgment doesn't jump up and bite you in the butt when you do go for a mortgage.

Anonymous · ‎07-09-2015

Thanks for the reply and suggestions. It is my understanding though that only FHA mortgages would count my spouses debt as part of DTI this is why I'm going to try conventional loan in my name only. I was told the only thing they would need from my spouse going conventional in my name only is for her to be on the deed unless someone else knows differently?

Also I do not show any judgments on my credit report only my spouse shows it on her credit report. When applying for mortgage credit will the pulls show a judgement on me? Again we only see it on her reports.

StartingOver10 · ‎07-09-2015

Don't rely on the credit report info.

Go to the public records section of your county and pull up your records and your wife's records. You may be surprised. Most juridictions have this online in the Clerk of Courts public records section.

As to conventional loan or FHA - I don't know if that would save you from having the judgment attach to your home or not.

Anonymous · ‎07-09-2015

Ok I checked public records and I don't see anything under my name nor do I see anything for me under public records on my credit report.

As stated I'm only seeing this showing up in my wife's name only. It is a judgement against her for a credit card she had 5 years ago. I'm just curious since I

will be shopping mortgages in the near future will I need her judgement taken care of if I go the conventional rout with a loan in my name only?

I know FHA requires me to settle her debt and would be counted towards DTI but its my understanding a conventional loan in my name only would not

require me to settle her judgment since I will not be using her for qualifying requirement's. Is this a true statement? Is there anywhere in the home buying process that her judgment will come back on me? TItle Company ETC???

StartingOver10 · ‎07-09-2015

Try a pm to DallasLoanGuy right here on this board, he can most likely give you accurate info

Anonymous · ‎07-09-2015

Not 100% sure on Texas, but I can tell you it wouldn't fly in California (also a community property state). In a community property state, the other spouse's wages can be garnished due to a judgment.

Anonymous · ‎07-09-2015

In Texas wages can not be garnished for credit card debts, but assets can be garnished. Im gambling here, I know they can come after

my bank accounts and assets but I need the extra money to take care of the down payment on the house first. I plan on taking care of this

after purchasing a house unless this for some unknown reason keeps us from buying. But again its my understanding conventional should be fine

since Im not using her to qualify. At least I think.

Anonymous · ‎07-09-2015

@Anonymous wrote:
In Texas wages can not be garnished for credit card debts, but assets can be garnished. Im gambling here, I know they can come after
my bank accounts and assets but I need the extra money to take care of the down payment on the house first. I plan on taking care of this
after purchasing a house unless this for some unknown reason keeps us from buying. But again its my understanding conventional should be fine
since Im not using her to qualify. At least I think.

Cool - crazy how much these laws vary from state to state.