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The truth about judgments and USDA

Frequent Contributor

The truth about judgments and USDA

Ok, Ok, i don't know the truth.  But here's what USDA says about judgments:

 

"No outstanding judgments within the past 12 months"

 

To many that means the judgment has to be paid off for 12 months before you can be approved to purchase.  However, I've seen people pay at closing, have payment plans, or have the judgment paid off for any variable number less than 12.  These people still are able to close on their homes.  Is it just discretion which gets people past this step?

 

I noticed FGMC has this as a qualifier on it's USDA page:

 

Judgments/Liens:  Must be paid at or prior to closing (no exceptions)

 

http://www.fgmcwholesale.com/UploadFiles/0630870593/FGMC_USDAPurchase_WS_0711.pdf

 

I have also been told by one prospective lender that although my judgment was paid ~6 months ago, I should still be approved.  (Additionally, my judgment has fallen off my credit report already)

 

So is there really a 12 month requirement?  Is it one of those things that is usually ignored by banks/USDA if the judgment is simply paid? 
I don't know, but seems worth mentioning here.


7 REPLIES
Moderator

Re: The truth about judgments and USDA

Having a paid judgment within six months of application shouldn't affect your qualifications for approval at all.

The operative language being 'paid'.

 

It is the unpaid judgments that present a problem for the lenders. Whether it is on a credit report or not is NOT an issue either. Judgments are recorded in the public records and don't have to show on your credit report to be valid.  Judgments have their own time frame for validity and can be renewed. This time frame varies by state so you would need to look up your own state's statutes to know what the time period is for any outstanding unpaid judgment. Normally a judgment is 10 yrs or 20 yrs with X for renewal. So they last forever Smiley Sad

 

So, basballguy, you should be good to go since yours is paid. Smiley Happy

 

 

Frequent Contributor

Re: The truth about judgments and USDA

yes i'm actually not worried at all.  But the general consensus is don't app until you're nearing that 12 month period of it being paid....I'm simply challenging that and pointing to this line on FGMC's site which will potentially serve as hope to someone real nervous.

 

I also know judgments have their own timeframe.  I'm quite curious if that's something the title dude will end up seeing since it'll be listed as satisfied.  I wonder if they see it and ignore it or see it and provide details.  I imagine it'd be different from title co to title co.


Super Contributor

Re: The truth about judgments and USDA

the language i read in my guidelines(as well as usda guidelines) it talks about outstanding judgments.... it says you cannot close until paid.

nothin i have read leans towards it having to be paid off for 12 months.

 

Retired Lender
Frequent Contributor

Re: The truth about judgments and USDA


DallasLoanGuy wrote:

the language i read in my guidelines(as well as usda guidelines) it talks about outstanding judgments.... it says you cannot close until paid.

nothin i have read leans towards it having to be paid off for 12 months.

 


So that helps dispell the myth.  If you look back through posts on this board, there are numerous people who believe it needs to be paid for 12 months.


Moderator

Re: The truth about judgments and USDA


basballguy wrote:

DallasLoanGuy wrote:

the language i read in my guidelines(as well as usda guidelines) it talks about outstanding judgments.... it says you cannot close until paid.

nothin i have read leans towards it having to be paid off for 12 months.

 


So that helps dispell the myth.  If you look back through posts on this board, there are numerous people who believe it needs to be paid for 12 months.


I see that too.  IMHO I think they are confusing the charge off date or recent delinquency with a judgment. As you know, if the judgment is paid you are golden. Yes the title co will see it but it doesn't matter to you because the judgment is satisfied. The only time it can be an issue is if you have paid it and there is no recorded satisfaction to show that it is paid. So on your paid judgment go onto your public records and make sure the recorded satisfaction is there - sometimes the creditor forgets to record it. If they have forgotten, get in touch with the creditor to get it recorded. That puts an end to the whole thing.  

Frequent Contributor

Re: The truth about judgments and USDA

bumping this thread.

 

I paid off a judgment in June of this year.  (6.5 months ago).  USDA has approved my loan.  So more evidence supporting the idea that your judgment does NOT need to be paid off for 12 months before you can apply.


Frequent Contributor

Re: The truth about judgments and USDA

I had a CO in 4/10 that led to a judgment in 2/12. I paid the judgment May 31, 2014 so not quite 2 months ago. Satisfaction has not yet been filed so I have to deal with that. 

 

Just got this from a loan officer at a local bank.

 

"For a judgement it’s 12 months. The satisfaction would need to be recorded for the judgement , you would have to prove the judgement was paid in 2/12."

 

Not sure why she thinks I would need to have paid it the same month it was won against me - maybe it's a typo. But she clearly thinks it needs to have been paid for 12 months before application. I pointed her to the USDA UW guidelines. I think it unlikely her bank will help me Smiley Wink

 

addendum: she emailed me back and said she was going to forward my email to an underwriter.


Starting Score: 2/2013 EQ 535
Current Score My Fico: 6/17 EQ 745| EX 740 | TU 775