Judgement question

[allgone28]

I have two judgements that were against me. One is from Goldsmith's/Macys (1997) and the other is from an apartment company (1999). Both of them has come of of my credit file. I was not served from not one of them. I'm looking to buy an house soon. Is it to late to have both of the judgements vacated? I live in Memphis,TEnn.

[flacorps]

Judgments often require a further filing to make them liens against real property (second recordation, usually with a cover sheet carrying additional info). Only if such a filing was done (and if such filing hasn't expired) would the judgments pose a dealbreaker with all lenders for you if you were trying to buy a house (new mortgage lender won't lend if their lien will be inferior to an existing one); however, the existence of the judgments might disqualify you for the best rates or preclude use of some lenders.

Possibly a judgment lien could be placed on your home after your purchase, which would be inferior to the mortgage but would still have the potential of being foreclosed on (or not, depending on your state exemptions). However, the foreclosing judgment creditor would need to immediately pay off the mortgage ... and that might be a powerful deterrent.

[allgone28]

Judgments often require a further filing to make them liens against real property (second recordation, usually with a cover sheet carrying additional info). Only if such a filing was done (and if such filing hasn't expired) would the judgments pose a dealbreaker with all lenders for you if you were trying to buy a house (new mortgage lender won't lend if their lien will be inferior to an existing one); however, the existence of the judgments might disqualify you for the best rates or preclude use of some lenders.

Possibly a judgment lien could be placed on your home after your purchase, which would be inferior to the mortgage but would still have the potential of being foreclosed on (or not, depending on your state exemptions). However, the foreclosing judgment creditor would need to immediately pay off the mortgage ... and that might be a powerful

deterrent.

I don't understand. I don't think it is a judgment lien. Or are you saying that once I get my house they will turn into that. I never was served with the judgement papers.

[flacorps]

The judgments are very likely not subject to being vacated on any substantive grounds, however the lack of service angle may just get your foot in the door on the procedural ground that the court never acquired personal jurisdiction over you due to lack of service. That is, unless substituted service was effected on the Secretary of State because you could not be found after a diligent search. So the first order of business is to look at how service was effected (notated on the "return of service"/summons, which should be one of the first things in the court file). If someone claims to have served you and never did ... you need to attack the judgment(s) on those grounds. Otherwise...

You'll want to find out the following things and report back:

1. How long is a judgment good for in TN?

2. How long is a judgment lien good for in TN?

3. Can a judgment be renewd in TN? Is the renewal (if any) statutory, or

does it require a common-law writ of scire facias?

4. Are judgment liens renewable?

5. Do judgments operate as liens on real and/or personal property in TN without the creditor taking any additional steps? Are the liens statewide, or limited to only the county (for instance, in FL liens on personal property are statewide, and recorded in Tallahassee, liens on real property are valid only in counties where the judgment has been re-recorded as a lien)?

and as to your own personal situation...

6. If additional filings were necessary, were judgment liens filed (second recordation).

7. Have those judgment liens expired or been renewed?

When you know the answers to the questions, people can help you more.

*******

If the underlying judgment is still good, an existing lien would be superior to any mortgage you would get on the property, because it would attach in the moments between the recordation of your deed and the recordation of the mortgage on the property. A mortgagee cannot allow that to happen, because the judgmentholder could foreclose and conceivably collect so much at the auction that the mortgagee wouldn't be fully covered (if nothing else, the mortgagee would run afoul of banking rules on safety and soundness of its lending). If there's no lien, or an expired lien, the judgmentholder could file a lien after you buy the house, but he won't be able to ace-out the mortgagee. So if he forecloses on the lien, the mortgagee gets paid first, and the judgmentholder might or might not get paid anything.

[J_Snow]

Confused... if they are not being reported, what is the issue?

[flacorps]

Confused... if they are not being reported, what is the issue?

They'll come up in a title search, for one thing.

Also, they're potentially still operative (or if dead, potentially subject to being revived), which gives the creditor the right to seize assets, garnish wages, and/or foreclose on real property, as well as call the debtor in for a deposition in aid of execution to find out where all that stuff may be.

[flacorps]

Confused... if they are not being reported, what is the issue?

I forgot to mention ... if the mortgage is over $150,000, the underwriter might pull a "full factual" RMCR, which would show the judgments and other baddies that have dropped off the ordinary 3-bureau "consumer" report.

[adminppdotcom]

Confused... if they are not being reported, what is the issue?

They'll come up in a title search, for one thing.

Also, they're potentially still operative (or if dead, potentially subject to being revived), which gives the creditor the right to seize assets, garnish wages, and/or foreclose on real property, as well as call the debtor in for a deposition in aid of execution to find out where all that stuff may be.

If they are on a title search, that IS a lein. They will have to be paid before (or during) the sale of the house or refinance. It's called a "clouded" title.

[flacorps]

Confused... if they are not being reported, what is the issue?

They'll come up in a title search, for one thing.

Also, they're potentially still operative (or if dead, potentially subject to being revived), which gives the creditor the right to seize assets, garnish wages, and/or foreclose on real property, as well as call the debtor in for a deposition in aid of execution to find out where all that stuff may be.

If they are on a title search, that IS a lein. They will have to be paid before (or during) the sale of the house or refinance. It's called a "clouded" title.

1. I was talking about a grantee search, part of the lender's due diligence before even making the purchase money mortgage loan.

2. The judgment wouldn't necessarily be a lien. If it was a lien, the mortgage couldn't go through without it being cleared first. If it had not been made into a lien, or if the lien had expired (but was subject to being revived or renewed), the lender would be in the position of making a decision whether the borrower was still creditworthy, since the lender's security interest would not be impaired by a later-perfected lien. Most lenders would still say no at that point. For the few who would say yes, the judgment would not be unexpected because the mortgage broker would have already steered the borrower to a program that would overlook it.

3. Clouded title doesn't preclude the property changing hands without paying the lien, it just would stop 99.99% of mortgages and will add an exception to any title insurance. An all-cash buyer could take the chance that the lien would go dormant, or that enforcement of it could be successfully fended off in court, or he could simply deduct the amount of it from the purchase price, close the deal and bank the cash to deal with the lien another day. Many people get screamin' deals on properties with "clouded title" because the seller doesn't have the acumen to efficiently deal with a small problem that looks like a giant one.