Legal Issues

A common obstacle one may face is dealing with legal issues that may arise that can affect home financing. Examples of these sorts of legal issues include liens, writs, executions, or judgments.

Some issues may be tied to the home while others may be tied to the person. Either way, the result is the same: legal issues can block home financing from happening until they are settled.

In some cases, a judgment can escalate into a Power of Sale, which can cause a slew of other issues and costs. Another complication associated with legal issues is that interest continues to accrue so the balance keeps increasing as time goes on.

Take an unpaid credit card, for instance. If the balance is high enough, the creditor may assign it to their legal team who will place judgment or execution against the cardholder for the balance plus daily interest. What may have started as a much smaller balance has now increased thousands of dollars as a result of the legal costs to issue the judgment plus the interest that continues to add up.

In addition to the legal issues of liens, writs, executions, and judgments, other problems can affect financing.

One example is an unpaid credit card. If the balance is high enough, the creditor may assign it to their legal team who will then place judgment or execution against the cardholder for the balance, plus daily interest.

Another example is a bill that has gone to collections. When a bill has not been paid for a long enough amount of time, the company will pass it off to a third-party collection agency that will try and recover the debt. If they find out the client owns a home, they mat assign that collection as a lien against the property. It will stay in place, collecting interest until settled. When the homeowner tries to refinance or sell, the lien will need to be paid out. In some cases, a homeowner isn’t even aware that the collection has turned into a lien and may come as a surprise.

These sorts of legal issues also have a negative affect on your credit. Even after they have been paid and settled, they will appear on your credit report for several years and have a direct impact on your credit score. This is why it’s important to deal with these issues as soon as possible so you can start rebuilding credit sooner.

If something happened beyond your control that caused the collection or judgment, contact us immediately. Don’t let fear paralyze your or think the problem will correct itself.

These situations can be dealt with using the correct approach and strategy. One option may be to set up a second mortgage with a private lender and obtain the funds needed to settle your issue. A second option is to refinance with an appropriate lender, cleaning up everything into one new, manageable payment.