Does being named in a civil lawsuit prevent one from selling a home, buying a new home, refinancing or obtaining a second mortgage?
The lawsuit is a result of an automobile accident and names one of the owners of a house owned jointly by husband and wife. The house and the lawsuit are both in the state of Maryland.
I am not seeking legal advice on what to do, this is just a general question.
Thanks,
MC$E
Lenders certainly ask this question when you apply for a mortgage. I would imagine that it wouldn’t help, and will most likely either:
A) not hurt you or
B) decrease the QUALITY of the financing you get, i.e. less pleasant terms and a higher APR.
I would imagine that a message board dedicated to such matters would provide more help than SDMB has so far.
Creditnet forums might know…
Obnoxiously long URL here: http://consumers.creditnet.com/straighttalk/board/forumdisplay.php?forumid=3&daysprune=1000&sortorder=&sortfield=lastpost&pagenumber=
Here is a mortgage forum:
http://honestmortgage.eloanhost.com/forum/
I hate to refer someone away from SDMB, and I promise I only do it when they fail to get help for as long as MC$E has.
Specifically regarding the issue of selling your property, simply being named in a lawsuit does not affect your ability to sell your property unless you lose the lawsuit, and there is an unsatisfied judgement entered against you that becomes a lien against the the property you are trying to sell. This will have to be satisfied (in most cases) before or at settlement, before the property can be transferred with clear title.
Re purchasing, mortgaging or refinancing property, relative to a pending lawsuit’s impact, per Jonathan Woodall’s note, there is no legal impediment to doing any of these things, the impact on (re) financing is really the lenders call.
When I went to buy a house, the mortgage company ran the report on me and found that it showed I was in the midst of a lawsuit. The lawsuit had actually been filed several years earlier – it was a dispute over professional fees – and it was settled out of court at that time. I told my mortgage agent this, and she told me I needed to get some written documentation that the suit had been resolved. She said that neither they nor any other mortgage company would give me financing if the lawsuit were actually still pending. I realize this decision would be up to each individual mortgage company, but she seemed confident that I would be hard-pressed to find anyone willing to finance me as long as the suit was supposedly open. I presume this was because of the obvious un-quantifiable liability - i.e., they approve me for a mortgage of $x per month, which I can afford, but maybe I can’t afford it if I get a judgement against me of $500, $50,000, whatever. If the suit was settled, they could factor that debt into my financial picture and rate me accordingly, but while it is pending it is a potentially unlimited liability, so that wildcard would make me an unacceptable risk in their eyes.
Just my own experience, FWIW.
A lender making a loan to the buyer or making you a loan as the owner, will typically require an affidavit be signed by the sellers/buyers/owners at closing, stating there are no lawsuits pending that would affect the lien.
My response does beg the question of which lawsuits might affect the sale or refinance, but I post it to show your concern may be well founded.
A judgment will not affect the lien of a prior mortgage. The mere filing of a lawsuit for a judgment is not a lien, not until the judgment order is entered. Some people file lis pendens when a judgment action is filed, but it has no effect, unless it is an action that affects the real estate.
There are two possibilities why a lender may want this info. The possibility that the judgment order can be entered before the mortgage is recorded. And, as you stated, it could affect your ability to pay.