We research, you save.
Got Questions On Rates? (855) 610-2972

New: Our latest update of the income you'll need to buy a home -- and see our 2019 update of State Homebuyer Programs

On the feds' deadbeat database? Here's how to get off it

By   |  Posted in Government Programs

The federal government's Credit Alert Verification Reporting System (CAIVRS) is a database created by the U.S. Department of Housing and Urban Development (HUD) to track people who have defaulted on federal obligations, including direct or guaranteed federal loans, incurred a federal lien or judgment or have had a claim paid by one of many government agencies.

If you're sporting this badge of dishonor, you already may have missed out on a home loan. Authorized employees of participating federal agencies access this list of delinquent federal borrowers for the purpose of prescreening loan applicants for credit worthiness.

FHA, VA, USDA loan applicants beware

Approved private lenders acting on the government's behalf can also access CAIVRS to screen applicants for federally-guaranteed loans. If you're applying for an FHA loan, VA loan or USDA loan, this means you.

You won't have access to CAIVRS yourself, but your mortgage lender should check CAIVRS first thing when you apply for a mortgage. The last thing you want is to get loan approval or preapproval, only to get bad news within days of closing that your name was found on the CAIVRS list.

How you got on the list, and what to do about it

Here are four ways you may have made this alleged deadbeat list, and what to do if you're on it when you apply for a home loan:

1. You defaulted on a student loan

Once you miss payments on your student loan, the maturity dates of your promissory notes are accelerated, which makes payment in full due immediately. You are no longer eligible for any type of deferment or forbearance. Additional consequences can include garnishment of your wages, offset of your federal and/or state income tax refunds (and any other payments you have coming), and lost eligibility for other federal loans such as FHA or VA mortgages.

Government-backed student loans are practically impossible to discharge. You can't unload them even through bankruptcy filing. Additionally, there is no statute of limitations for enforceability of defaulted student loans.

What to do: To restore your eligibility for government-guaranteed mortgages, try the following:

  • The obvious solution--if you can afford to--is to simply repay or satisfy the loan in full.
  • Attempt to consolidate your loan through the Federal Family Education Loan (FFEL) consolidation program or the William D. Ford Direct Loan Program.
  • Apply to rehabilitate your student loan, which involves making at least nine full payments of an agreed amount within 20 days of their monthly due dates over a 10-month period to the U.S. Department of Education. Once your loan is rehabilitated, you are no longer reported as in default and your name comes off CAIVRS.

2. You lost an FHA-backed home to foreclosure

If your lender was unable to recover your entire loan balance in a foreclosure sale, HUD would have been obligated to pay a claim for the amount of the deficiency, and you would have lost your eligibility in the process.

Your eligibility is not restored until three years after HUD paid the claim, which could be much later than the foreclosure date.

What to do: Wait it out. According to HUD's website, you will remain listed on CAIVRS for 38 months after the claim is paid, but you will be eligible for a mortgage after 36 months.

3. You owe the federal government

CAIVRS contains data reported by the following agencies:

  • Department of Housing and Urban Development
  • Department of Veterans Affairs
  • Department of Education
  • Department of Agriculture
  • Small Business Administration
  • Federal Deposit Insurance Corporation
  • Department of Justice

Notice that the Internal Revenue Service (IRS) is not on this list; it doesn't report to CAIVRS. However, IRS liens are reported to credit bureaus, and IRS installment agreement payments must be disclosed to your lender and included in your debt-to-income ratios.

What to do: Most FHA lenders will want to see a satisfactory payment history (usually 12 months) before approving you for a mortgage, so get current well before you shop for a home. If there is a tax lien, the IRS must agree to subordinate it to the new mortgage.

4. You're on CAIVRS by mistake

Of course, a final possibility is that you're not supposed to be on CAIVRS at all. Perhaps you've satisfied a creditor, or perhaps more than 36 months have gone by since a claim was paid. (You may even have had a claim paid but fall under one of HUD's exceptions that allow you to get an FHA loan despite being on CAIVRS.)

What to do: If you turn up on CAIVRS, your lender is given the name of the agency reporting the default, the case number of the defaulted debt, the type of delinquency (default, claim, foreclosure, lien or judgment), and a telephone number to call for further information or assistance.

Your loan officer can pass this information on to you, and you should contact the reporting agency and clear the error before your scheduled mortgage closing. It's your responsibility to contact the agency yourself and resolve the issue. Your lender cannot delete CAIVRS information, even if you have proof that you are listed in error.

If you're applying for an FHA loan, the FHA also can't help you get off CAIVRS directly. It can neither remove correct CAIVRS information nor alter or delete CAIVRS information reported from other federal agencies.

More help from HSH.com

  • HAMP versus HARP: Which is right for you?

    Making Home Affordable offers two plans for troubled homeowners. The Home Affordable Refinance Program, or HARP, allows underwater homeowners to refinance if they can find a mortgage with a better interest rate. The Home Affordable Modification Program, HAMP, subsidizes mortgage lenders who modify the terms of borrowers' loans if they have become unaffordable. Ask yourself these questions and see which program works best for you.
  • The salary you must earn to buy a home in the 50 largest metros

    Here’s how much salary you would need to earn in order to afford the median-priced home in your metro area.
  • HSH.com on the latest move by the Federal Reserve

    The Federal Reserve concluded a meeting today, leaving the federal funds rate unchanged at a range of 2.25% to 2.5%, but continued to express patience and flexibility in its current approach to monetary policy.
  • 8 common refinance mistakes

    A refinance can lower your payments and save you money, but these eight mistakes could end up costing you in the long run.
  • Home buyer programs by state

    Our nationwide resource for state-backed mortgage programs: Find down payment and closing cost assistance, special low-rate mortgage programs and more!