How to Satisfy the Judgment When Refinancing a Home

By Brett Johnson

Judgment liens, unlike collections, give the creditor a right to attach debts owed to real estate property. Most loan programs will allow for judgments to be satisfied at time of closing. However VA (Veterans Administration) loans require judgments and liens against you or your property to be fully satisfied before qualification. These loans do not allow for liens to be satisfied at close of escrow.

Determine that the judgment is your responsibility by gathering all the information you can in advance of contacting the lien holder.

Contact the lien holder of your judgment. Confirm the amount owed or negotiate a reduced settlement amount. Obtain the agreed terms in writing that clearly disclose the amount required to release the judgment, including all fees and accrued interest.

Confirm that your lender can allow the judgment to be paid at time of closing. It will be added as a condition of the loan prior to closing.

Provide the written agreement to your underwriter upon receipt. The underwriting or processor will confirm the agreement, terms and amount needed to satisfy the judgment lien in your closing costs.

The closing coordinator when issue the pay-off funds directly to the lien holder at time of closing.

Confirm that the judgment lien reported on your credit actually belongs to you.

Confirm that your lender will allow the judgment to be paid through the loan transaction.

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