When your Lender takes a mortgage application, there are multiple steps and pieces to it as a single component such as the credit report does not tell the whole story. If the information you provide is not complete or is not accurate, although you may receive a pre-approval upfront, you may lose that pre-approval later in the transaction.
One of the key components to lending is your basic credit report but that basic credit report does not tell the whole story. The results of a 31-state lawsuit ended up with the credit bureaus no longer reporting some very basic and critical public record information including judgments, tax liens and similar public record information as of July 1, 2017. The impact to many was huge!
Without readily being able to see this critical information upfront, the Lender you are working with must rely on how you answer the credit declarations that are a part of your basic mortgage application. If you answer no to the question “are there any outstanding judgments against you” or “are you presently delinquent or in default on any Federal debt or any other loan”, the Lender has to assume that there are no unforeseen issues that will arise.
Your pre-approval will very likely not go awry until the title company pulls preliminary title and does a name search on you. That search will pull up everyone that has your same name or a similar name without clarifying the information identified is in fact yours. It then becomes your job to prove that the judgment or tax lien identified are in fact not yours via a Name Affidavit that the Title company will provide you. Not the end of the world, but it adds more time and work, but what if it is identified to be yours?
When a judgment is identified, that judgment will take precedent over the proposed mortgage preventing the mortgage company from closing on the property you are trying to purchase. ANY identified judgments must be paid in full and a satisfaction of judgement received before the mortgage can proceed. Any tax liens identified or federal student loans in default must be dealt with either through full payment and/or an acceptable payment plan with payments made as agreed.
Historically, we had the advantage of catching this upfront. We no longer have that advantage, so be very careful how you answer these questions as the answer is critical.
Questions? Give me a call, 360-459-1200!