Any success stories with Judgment & FHA loan?

[Mike_B03]

Our loan is in Underwriting but I am really stressing about a Judgment that I have against me from an old debt. I disclosed the Judgment with the loan officer early in the process and have setup a payment plan which is already factored into the monthly debt-to-income ratio (also sent a copy of the payment plan arrangement to the loan officer).

The judgment wasn't brought up by Underwriting at all so I felt ok about it, but now they asked for a letter of explanation for a non-sufficient funds fee which was caused by the judgment creditor putting a hold on our bank account before setting up the payment plan. 

My fear now is that the Underwriter was actually not aware of the judgment since they didnt' ask about it (maybe the loan officer never told them?).

Has anyone had success with getting a mortgage loan with a Judgment agains them? Would love to hear some success stories to calm my nerves.

[jandj80]

We don't have any owed judgements at this time, but do have one from 2009 that we paid back then, and we are currently in underwriting as well. However, it is my understanding that if it is in a repayment plan, and there is room for it in your DTI, you are good to go. If its medical, they really don't worry much about them at all. 

[JM-AM]

+1

As mentioned if you are in repayment plan and submitted should not be an issue. As long as within DTI ratios as mentioned.

[Kay_Cee]

You should be OK if it was disclosed and the payment arrangement is already factored into your DTI.  I closed on my FHA mortgage with a paid judgment from 2007 and a current payment plan with the IRS for back taxes.  The key is having an established, on time payment record.  That being said, you don't stop feeling the stress until you actually get the clear to close.

[Mike_B03]

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@Kay_Cee wrote:

You should be OK if it was disclosed and the payment arrangement is already factored into your DTI.  I closed on my FHA mortgage with a paid judgment from 2007 and a current payment plan with the IRS for back taxes.  The key is having an established, on time payment record.  That being said, you don't stop feeling the stress until you actually get the clear to close.

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The established, on time payment record may be a problem if they ask for it because I've only made 1 payment so far since the payment plan was just setup a month ago. By the time we are supposed to close in 6 months though, there would be a record of 7 payments though, so if needed, maybe they could make it a condition of closing to show the payment history.

I sent the letter of explanation and got back a reply of "This will work fine". It's still on the list of conditions in the online status though so not sure if it's resolved or not. I absolutely hate the not knowing! It's been 2 months since we started this loan process and I don't know when it'll be finally be over and we have our commitment letter.

[tooleman694]

If they are looking for an excuse to kill it, this will be it.

Hopefully the underwriter is just trying to wrap this one up.

When I got denied in underwriting, it was with something just like this. ruined my year.

[Mike_B03]

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@tooleman694 wrote:

If they are looking for an excuse to kill it, this will be it.

Hopefully the underwriter is just trying to wrap this one up.

When I got denied in underwriting, it was with something just like this. ruined my year.

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I like to think that I wouldn't be that upset, but I'm probably fooling myself.  When we went into this, we thought "It would be a miracle if we get a loan, but let's try, what do we have to lose?" because of our credit, so the whole time we've been very cautious and tried not to get excited. It sort of ruined the design center experience when we went to pick all the options and finishes because that was very early on and in the back of our minds, we almost felt that we were wasting our time. The further we make it along though, the more optomisic we have become.

Hopefully they don't want to kill the deal, and I like to think that it's also in their interest to try and make it happen since the builder and the mortage company are on in the same, they have more to gain than if the mortgage company was a 3rd party. 

We have both said that if we get denied, it will be a learning experience, we'll see why we were denied, get it fixed, and try again at a later time.

[tooleman694]

You and I think alike.

We were denied in the 11th hour in underwriting on closing day.

We found the problem and fixed it. We are closing in April and im still freaking out lol.

[Mike_B03]

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@tooleman694 wrote:

You and I think alike.

We were denied in the 11th hour in underwriting on closing day.

We found the problem and fixed it. We are closing in April and im still freaking out lol.

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Hey Tooleman I sent you a PM.

[tooleman694]

PMed you back.