ImaBird Posted February 5, 2008 Report Posted February 5, 2008 I heard that when trying to purchase a home, you can get a debt judgment rolled into closing to avoid a property lien... ...is this true? How about in an FHA loan?
Ahntara Posted February 5, 2008 Report Posted February 5, 2008 I've never heard of this and can't imagine it happening, but who knows. If some mortgage pro and lender decided to get creative...Judgments can attach to real property in the half second between the recording of the sale/transfer (of the property) and the mortgage lien, which is the lender's security. Obviously, no lender would allow this. It would be foolish. They might as well give you an unsecured loan rather than a mortgage. They insist on having the first (priority) lien on the property should they have to foreclose. This mitigates their risk and is the basis of mortgage lending.Judgments, being legal actions, require a proper legal disposition. "Paid" is not a disposition. The judgment would need to be paid and a Satisfaction of Judgment obtained and recorded prior to the recording of your mortgage (in your county's Public Records department/division). As I said, some lender, broker or cunning title agent (or Real Estate attorney) may be able to figure out a way to make this happen. But my experience leads me to believe that this question would merit a quick "NO!" should it even get asked.Can't wait to hear the mortgage professionals who post here answer to this...*looks to the skies*
ImaBird Posted February 6, 2008 Author Report Posted February 6, 2008 Well, I found a broker who is interested in speaking with me about doing this with an FHA 203(k) loan. I'll let you know how it goes!
ImaBird Posted February 6, 2008 Author Report Posted February 6, 2008 Okay, the broker told me that the buyer can make a concession in the contract for a judgment in the same way they can make a concession in teh contract to pay your closing costs for you.
akins503 Posted February 7, 2008 Report Posted February 7, 2008 I've never heard of this and can't imagine it happening, but who knows. If some mortgage pro and lender decided to get creative...Judgments can attach to real property in the half second between the recording of the sale/transfer (of the property) and the mortgage lien, which is the lender's security. Obviously, no lender would allow this. It would be foolish. They might as well give you an unsecured loan rather than a mortgage. They insist on having the first (priority) lien on the property should they have to foreclose. This mitigates their risk and is the basis of mortgage lending.Judgments, being legal actions, require a proper legal disposition. "Paid" is not a disposition. The judgment would need to be paid and a Satisfaction of Judgment obtained and recorded prior to the recording of your mortgage (in your county's Public Records department/division). As I said, some lender, broker or cunning title agent (or Real Estate attorney) may be able to figure out a way to make this happen. But my experience leads me to believe that this question would merit a quick "NO!" should it even get asked.Can't wait to hear the mortgage professionals who post here answer to this...*looks to the skies*I'm not a professional, but in PA judgments can't hop from one property to another. In other word a judgment can't attach to a new property purchased. Each state has their own laws.
Ahntara Posted February 7, 2008 Report Posted February 7, 2008 "...judgments can't hop from one property to another..."Agreed. But what was posted that hinted at this? If the OP has a judgment and deed to property, the judgment has attached to the current property owned. To sell or refinance it, the judgment must be disposed. If the OP doesn't own real property now, the judgment will attach to the new purchase. Either way, it's a problem."...make a concession in the contract..."Okay. That takes care of the money that needs to be paid. What about the title issue(s)? No kidding, he may have this all figured out, I just don't see it - yet. Please post with details...*looks to the skies*
akins503 Posted February 7, 2008 Report Posted February 7, 2008 "...judgments can't hop from one property to another..."Agreed. But what was posted that hinted at this? If the OP has a judgment and deed to property, the judgment has attached to the current property owned. To sell or refinance it, the judgment must be disposed. If the OP doesn't own real property now, the judgment will attach to the new purchase. Either way, it's a problem."...make a concession in the contract..."Okay. That takes care of the money that needs to be paid. What about the title issue(s)? No kidding, he may have this all figured out, I just don't see it - yet. Please post with details...*looks to the skies*Agreed as far as refinancing. My point was in my state PA a judgment can't attach to a new purchase.
Magdalen77 Posted February 7, 2008 Report Posted February 7, 2008 Agreed as far as refinancing. My point was in my state PA a judgment can't attach to a new purchase.If that's true why were/are the mortgage guys so interested in getting a repo and the money that the finance company claims I owe off my credit report? They don't have a judgement, have never sent it to collections. I figured they were worried about possible other liens against the house after purchase. It's not my credit scores, they've all told me that they could finance me through FHA with my credit scores the way they are if it wasn't for the outstanding money on the repo. The repo is from 2004, so it's not like it's enough a new derogatory.My scores range from 610 to 660 with a middle score around 630.
Ahntara Posted February 8, 2008 Report Posted February 8, 2008 "...can't attach to a new purchase."Okay, understood. Do you to believe the OP already owns property?Let's suppose ImaBird does, and that the lien has attached to that title. In PA, the lien would not jump from this title to another. Got it. But the lien still clouds title on the first house and must be dealt with before selling or refinancing THAT property. Yes, ImaBird can buy more real estate, without credit, of course, cuz no mortgage lender will give a dime with an outstanding lien on the CR. But he/she wouldn't be able to sell or refinance the current home without disposing of the lien. It's still a problem that has to be dealt with sooner or later.
akins503 Posted February 8, 2008 Report Posted February 8, 2008 "...can't attach to a new purchase."Okay, understood. Do you to believe the OP already owns property?Let's suppose ImaBird does, and that the lien has attached to that title. In PA, the lien would not jump from this title to another. Got it. But the lien still clouds title on the first house and must be dealt with before selling or refinancing THAT property. Yes, ImaBird can buy more real estate, without credit, of course, cuz no mortgage lender will give a dime with an outstanding lien on the CR. But he/she wouldn't be able to sell or refinance the current home without disposing of the lien. It's still a problem that has to be dealt with sooner or later.Agreed
firstsource Posted February 9, 2008 Report Posted February 9, 2008 Okay, the broker told me that the buyer can make a concession in the contract for a judgment in the same way they can make a concession in the contract to pay your closing costs for you.I would suggest that you talk with several other brokers in your area. Most lenders will not allow sellers to pay for anything other than actual closing costs-or in the case of FHA - down payment assistance. (I say most as I don't know every lender or their programs)IMHO this is not a time in the financing industry trials to try to come up with a side deal using FHA 203(k) loan to pay a judgment or debts. You can have a family member pay them for you, or you can pay them yourself, but that is the extent of what you can do.You are asking to be in serious trouble if you agree to fudge in these times.Charles
flacorps Posted February 9, 2008 Report Posted February 9, 2008 If that's true why were/are the mortgage guys so interested in getting a repo and the money that the finance company claims I owe off my credit report? They don't have a judgement, have never sent it to collections. I figured they were worried about possible other liens against the house after purchase. It's not my credit scores, they've all told me that they could finance me through FHA with my credit scores the way they are if it wasn't for the outstanding money on the repo. The repo is from 2004, so it's not like it's enough a new derogatory.My scores range from 610 to 660 with a middle score around 630.Having open medical collections is not as bad as having charged off credit cards is not as bad as having a vehicle repo is not as bad as having a foreclosure is not as bad as bankruptcy (discharged) is not as bad as bankruptcy (dismissed) is not as bad as having unpaid judgments is not as bad as those judgments also being liens that would attach to any new real property purchased. A mortgage program will have guidelines that will (or will not) allow some degree of bad things. Having gone belly up on a secured (by the vehicle) loan is pretty bad. If it is still in SOL for suing on the deficiency (typically 4 years) that's worse. The underwriter has to follow the guidelines. To get within the guidelines you'll need to settle with whoever owns the bad paper on the repo. Hopefully you can wait until it's out of statute and pay them at a deep, deep (say 80%) discount ... with a "doubtful and disputed" clause in the settlement agreement stating that no 1099-c will be issued on the discounted amount. YMMV
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