Got in a mix up! Didn't disclose a judgment to loan officer...now what?

[Anonymous]

First a little back story. I have a judgment against me from 4 years ago that does not show up on any credit report or on the county recorder's search or the county court records. Only place it does show up is the justice court website and even there, a full name search doesn't bring it up as they misspelled my first name (It can be found if doing only a last name search and then checking each name that shows up). 

So current situation my wife applied for a mortgage on a new build that would be ready next summer. The plan was for just her to be on the loan so the judgment wasn't an issue as its only against me. The loan officer contacted her and said to help qualify for the loan, it would help if I was added to the loan.  She told them that my credit isn't good but didnt tell them I have a judgment (I also have multiple charged off and collection accounts that are almost 7 years old and scheduled to fall off the credit report in Feb 2013). The loan officer ran my social security number and said it looks like it should be fine and asked that I fill out a loan app. 

I started doing all sorts of reading online and read a lot about how if you satisfy a judgment before closing, then it's not a problem, and since closing isn't until next summer, that won't be a problem to take care of. We discussed it and decided since it doesn't show on the credit reports, we can take care of it before closing and didn't want to risk losing the house (it's exactly what we are looking for, perfect lot, we already went and chose all the options and finishes) so I didn't disclose that I know about the judgment.

Now I'm stressing out about the whole thing pretty bad. Should I go forward and take care of it hoping it doesn't get discovered before I can pay it off? Do I go back to the loan officer and tell them I left it off? What would happen if they discover it on their own? 

[vlaw1084]

More than likely since it does not show up on your credit report it could show up on a state reported caivrs system.  It's not government reported, but you don't want to be at the end f the process only to find out, You had the time to take care of the issue before you close.  I would pay the judgment and get it vacated from court records, then if it ever became a question, you could advise you were cleaning up your credit and it's been taken care of.  I would also let loan officer know so she or he could advise a solution as well. The last thing you want to do is not disclose something to your loan officer if you have a relationship and then it show up.  It may come across as being untruthful.  Just my thoughts , but I would hate to see you get to the finish line only not to cross it.

[StartingOver10]

^^^Very good advice above. You are best off by having the judgment vacated if at all possible. If not, get it paid and a recorded Satisfaction so it becomes a non-issue. Definitely discuss with your LO - you don't want them to kick out the app due to non-disclosure of debt on your mortgage application. Approach your loan officer right away about your plan to clear the debt.

[jasimae]

There is no "state" CAIVRS system. CAIVRS is only for Federal debt, not State. Obviously, if your name is mis-spelled it ight seem like you have an advantage in that it would be difficult to correlate the debt to you, but you should disclose it. The only way you'd be able to get it vacated was if yu were improperly served or some other extenuating circumstance that showed the error of the judgment being reported was not your fault.ein

[Anonymous]

If we decide to go forward, I will talk to the LO tomorrow tell see what they say. I'm actually working on setting up a payment plan on the judgment right now, literally in the middle of negotiations...will a payment plan be ok or does it need to be paid off in full before closing? The judgment is for $13,000. The judgment creditor actually put a garnishment on our bank account, we were able to get the funds released but it caused a few NSF fees (which were refunded by the bank but still show on bank statements). I didn't even know they scrutinize your bank statements so much until doing all this reading that I'm doing now. 

As I said though...IF we decide to go forward because I'm contemplating pulling the plug and losing the $1500 we put down as a deposit. Seems like there are too many things to clean up plus now FHA looks like it mill require PMI for the life of the loan? If that's the case, it seems better to wait until we an qualify for a conventional loan. 

[StartingOver10]

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@Anonymous wrote:

If we decide to go forward, I will talk to the LO tomorrow tell see what they say. I'm actually working on setting up a payment plan on the judgment right now, literally in the middle of negotiations...will a payment plan be ok or does it need to be paid off in full before closing? The judgment is for $13,000. The judgment creditor actually put a garnishment on our bank account, we were able to get the funds released but it caused a few NSF fees (which were refunded by the bank but still show on bank statements). I didn't even know they scrutinize your bank statements so much until doing all this reading that I'm doing now. 

As I said though...IF we decide to go forward because I'm contemplating pulling the plug and losing the $1500 we put down as a deposit. Seems like there are too many things to clean up plus now FHA looks like it mill require PMI for the life of the loan? If that's the case, it seems better to wait until we an qualify for a conventional loan. 

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Check your contract, you might have the ability to cancel without losing your deposit if you are still within your inspection period. Or you may qualify for a refund due to not being able to qualify for the loan given the current status of your unpaid judgment.
I agree about waiting to purchase until you are ready financially. Remember, you don't need to put down a full 20% for a conventional loan as you can get a conventional loan for as little as 3% down (fannie mae properties only) or 5% down on other properties. Naturally, with 30% down you don't pay MI which is helpful. Good luck in your plan to pay off the judgment lien holder.

[StartingOver10]

**sorry, I meant 20% down, not 30% above.

[Anonymous]

Cancelling at any time will cause us to forfit our deposit however we do get the deposit back if we are not approved for the loan.

I called the loan office today and told them about the judgment, they will talk to the underwriter and see what needs to be done.