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Understanding the CAIVRS Report

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When you apply for a mortgage, your lender pulls a credit report verifying your payment history, how many accounts you have and the balances of all those accounts. Lenders will also check public records to see if any judgments or tax liens have been filed against you, or if you’ve filed for bankruptcy.

All this is part of your credit score, and most people are familiar with the concept. However, if you’re applying for a mortgage backed by the government like an FHA loan or VA loan, your information will also be run through the Credit Alert Interactive Verification Reporting System, known as CAIVRS. This little-known government database checks for specific types of credit defaults that could affect your loan approval.

We’ll discuss everything you need to know about CAIVRS in this article. We’ll cover:

What is CAIVRS and what is it for?

CAIVRS (pronounced KAY-vers) is a database that tracks liens, defaults and any outstanding debt owed to federal agencies. The U.S. Department of Housing and Urban Development requires that lenders making government loans through the Federal Housing Administration, Veterans Affairs or U.S. Department of Agriculture screen borrowers through the system before approving mortgage applications.

HUD founded CAIVRS in 1987 as a way to keep track of people who had defaulted on federal loans. The information was originally designed to make sure anyone applying for federal credit wasn’t in default on a federal debt already. Two years later, the federal government expanded its goals to include making sure applicants were creditworthy.

Today, federal agencies that extend government-backed credit and private lenders that administer federal lending programs use CAIVRS to screen applicants. The database has come to serve several purposes:

  • It verifies that people applying for federal loan programs do not have outstanding debt or delinquency on other federal loans.
  • It helps private lenders issuing government-backed loans to avoid extending credit to people considered credit risks.
  • It shows the public that the federal government is taking steps to collect on unpaid debt.

Most likely your credit report will also reflect any issues that appear on the CAIVRS report, such as a defaulted student loan or the foreclosure of a government-backed loan on a prior home.

But usually, the CAIVRS has the final say. Even if you qualify for a mortgage according to your credit scores, you can still be rejected if CAIVRS shows that you’ve recently defaulted on a federal loan.

What information shows up in CAIVRS?

CAIVRS is exclusively for government agencies to report delinquencies on federal loans. There are six agencies that report to the CAIVRS system.

U.S. Department of Housing and Urban Development

HUD regulates the housing industry and oversees the FHA, the largest mortgage insurer in the world. HUD reports borrowers who:

  • Are currently delinquent on an FHA-insured loan.
  • Have had an insurance claim paid on a loan made or insured on their behalf by HUD in the last three years.

Veterans Affairs

The Veterans Affairs (VA) home loan program gives eligible active-duty service members and military veterans the ability to buy a home with no down payment and no minimum credit score.

The VA reports information to CAIVRS about defaults, delinquencies or insurance claims paid on federally backed loans acquired through VA programs. These also include the Native American Direct Loan (NADL) program and Interest Rate Reduction Refinance Loans (IRRRL).

Department of Education

The Department of Education oversees programs for students and parents that provide federally backed loans to pay for college tuition and related expenses.

The department reports loan delinquencies, defaults and insurance claims paid on federally backed education loans.

U.S. Department of Agriculture

The USDA’s loan program issues no down payment home loans to low- to moderate- income families in qualifying rural and suburban areas. CAIVRS reports will include delinquencies, defaults and insurance claims on federally backed USDA loans, such as the Single-Family Housing Guaranteed loan program.

Small Business Administration

The SBA delivers loans and loan guarantees to small businesses. Borrowers who default or are delinquent on their debt are reported to CAIVRS.

An SBA loan could escape reporting on your personal mortgage credit report, especially if it was not taken out in your individual name, but in the business name using a tax identification number (TIN) instead of your Social Security number.

Department of Justice

CAIVRS collects data on DOJ debtors or those who have unsatisfied judgments (a court order to pay a debt). This can include delinquent debt that has been referred to the DOJ for collection through litigation or settlement.

Tax delinquencies and liens are not reported to CAIVRS. Those issues are handled separately by the Internal Revenue Service (IRS) and will show up on credit reports in the public records section.

How to determine if you have a clear CAIVRS report

There’s no way to determine if you are listed on the CAIVRS database until you apply for a federal loan. Only participating federal agencies and private lenders can access the database, but if you’ve defaulted on a loan you took out through a federal program to pay for your education or to start a business, there’s a pretty good chance you would be on the list.

If you did default on a federal loan but have since paid it off and are applying for an FHA, VA or USDA loan, ask your lender to run a CAIVRS report first. If for some reason the debt hasn’t been cleared, at least you can have the paperwork handy to have the information corrected.

Here’s a brief overview of the process a lender will follow to run you through the CAIVRS database.

  • The lender will enter your name and Social Security number or tax ID into the online CAIVRS database.
  • HUD will send a clear confirmation code if the number is not in the database.
  • If your name is identified in CAIVRS, HUD will reply with the name of the agency reporting the issue, the defaulted debt’s case number, the type of delinquency (for instance, a default, lien or judgment) and the number you can call for more information or assistance.

If you are not in the process of applying for a government-backed loan, there’s really not much reason to ask to have CAIVRS run.

What happens if your CAIVRS isn’t clear?

Once you have paid off your debt to the federal government or three years have passed since you defaulted on a federal loan, your name will be dropped from the list.

But if you’re applying for a new federal loan during that three-year period, you will likely have difficulty. If it’s been less than three years since you defaulted according to CAIVRS, you won’t be able to get a new FHA, VA or USDA loan.

VA lenders may still be able to approve you for a loan if the delinquent account has been brought current, or you have entered into a payment arrangement and made initial on-time payments. You may also be able to bring a delinquent VA loan current to clear a CAIVRS listing with a VA interest rate reduction refinance loan.

You won’t likely need to go through CAIVRS for an FHA streamline refinance. FHA streamline refinance loans are offered if you’ve had your current FHA mortgage for at least seven months, and have paid it on time. As long as there is a financial benefit to the streamline such as reducing your payment or switching from an adjustable rate to a fixed rate, you can be approved without income documentation or an appraisal.

Student loan delinquencies will hinder your ability to get government loan financing for as long as the loans are unpaid or unresolved. Unlike an FHA, VA or USDA home loan default, there is no waiting period after which you are eligible to apply for a new federal loan after a student loan default.

How long do delinquencies stay on CAIVRS?

Delinquencies will stay on CAIVRS until they are resolved. You won’t be able to get any type of federal loan unless you prove the debt has been paid, or you have entered into an arrangement to pay it off. At that point, your name will be removed from the list.

The exception to this is with defaults on government-backed mortgages you once held but no longer do. If you defaulted on a previous FHA loan, as noted above, your name would remain on the list for three years. This is the same time period that you would have to wait after a foreclosure to apply for a new FHA loan.

VA loan programs may also allow you to get a new VA home loan two  years after foreclosing on a prior VA loan. Many veterans don’t realize they are allowed to have more than one VA loan, using something called second-tier entitlement.

If it’s been two years since you defaulted on a VA loan, it might be worth checking with a VA-approved mortgage lender to see if you’re eligible for this type of new VA Loan.

Are there exceptions to this rule?

There are some exceptions to the CAIVRS rule that will allow delinquencies or defaults on federal loans without preventing you from getting a federally backed mortgage.

  • Assumptions: You will be eligible for an FHA-insured mortgage if the buyer of your property assumed your government-backed loan and then defaulted on it. However, you must prove the loan was not in default when you sold it. That may require you obtain a payment history from the prior lender showing you were current up to the date the assumption took place.
  • Bankruptcy: If your bankruptcy was caused by circumstances beyond your control, you might still be eligible for an FHA loan. Such circumstances include serious, long-term or uninsured illness, or the death of the principal wage earner in your household.
  • Divorce: If your divorce settlement or legal separation agreement awarded the property to your ex-spouse, you might be exempt from the CAIVRS eligibility rule. The exemption will not be granted, however, if an insurance claim was paid on the mortgage in default before the divorce. Keep in mind that the FHA does not consider divorce to be a circumstance beyond your control. Even if an ex-spouse was supposed to make the payment according to your divorce decree, if the joint debt ends up in foreclosure, you’ll have to wait for the standard three-year waiting period before you can get a new FHA loan.
  • Disaster victims: If your loan was current before disaster hit, and any delinquency or paid insurance claim resulted from the effects of that disaster, you may be exempt from the CAIVRS eligibility rule.

What if you are on CAIVRS by mistake?

FHA will delete incorrect information if you are incorrectly listed on a CAIVRS report. This might be due to an incorrect Social Security number put into the system or a case of identity theft.

You’ll need to contact the appropriate FHA Homeownership Center in your area if you believe you are listed on the CAIVRS in error.  Also, just because you are removed from the CAIVRS system doesn’t mean you’ll be automatically approved for a government mortgage loan.

You’ll still have to meet minimum mortgage requirements for FICO Score and debt-to-income ratios (your total debt divided by your gross income) depending on the program you apply for.


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