If you are in the market for a government-backed loan, such as the FHA or VA loan, you may hear the term CAIVRS. Just what is it and how does it pertain to your loan application?
CAIVRS stands for Credit Alert Interactive Verification Reporting System. It’s a database of any liens or defaults that you have that pertain to federal loans. A listing in this database under your name could put an end to your application for a government-backed loan.
What Happens if you are on CAIVRS?
If a lender runs your name through CAIVRS and it comes back with a listing, at the very least expect a delay in the processing of your application. The lender will have to determine why you are in CAIVRS and what needs to be done to get your loan approved.
Keep in mind, CAIVRS isn’t just for housing debt. If you defaulted on any type of federal loan or debt, your name will appear in the system. It isn’t until you make good on the debt that you will be able to move forward with your loan.
If you did default on a mortgage, such as an FHA loan, you will have to wait three years before you can apply for another government-backed loan.
Which Loans Report in CAIVRs?
Since there are hundreds or even thousands of federal loan programs out there, you probably wonder who actually reports to CAIVRS. In other words, will your defaulted loan show up in the system?
The largest reporting agency is HUD, which oversees FHA loans. If you defaulted on an FHA loan or lost your home to foreclosure and you had FHA financing, it will be in CAIVRS. It will show borrowers that have an FHA loan now that are late on their payments as well as those that lost their home.
The next largest reporting agency is the Department of Education. The DOE oversees student loans and parent loans for a child’s education. If a borrower has defaulted on student loans, the lender will know about it. The borrower will have to get current on the student loans before a mortgage lender can provide a loan.
Other government agencies that report to CAIVRS include the VA and USDA. These agencies both offer government-backed loans for borrowers to buy a home. CAIVRS will show future lenders if the borrower ever had a defaulted loan, if the agency had to pay an insurance claim on the loan to bail the lender out of foreclosure, or if the borrower is currently in default.
The remaining entities that report to CAIVRS include the SBA and the Department of Justice.
The only debts that aren’t reported to CAIVRS are any tax-related issues. These are handled by the IRS and will usually become an actual lien on the property, which the lender will find during the title search.
If you are on CAIVRS, you will have to work with the reporting lender to resolve the situation. You will need to bring the debt current. If you completely defaulted on a loan that went into foreclosure, it remains on CAIVRS until three years have passed.