Guide To Lenders
July 22, 2014

Passing a CAIVRS Check

Gina Pogol

FHA refinancing is wildly popular because its underwriting guidelines are more flexible than those of other programs, and you don't need to have an FHA home loan to refinance into a new one. But FHA's flexibility has limits--everyone who gets an FHA loan has to pass a CAIVRS check.

Top Refinancing Tips: FHA Refinancing Requires a CAIVRS Check

What Do Caves Have to Do with Mortgage Refinancing or FHA Loans?

CAIVRS is pronounced "cavers," but it has absolutely nothing to do with spelunking.

CAIVRS stands for the Credit Alert Interactive Voice Response System. CAIVRS was created by the US Department of Housing and Urban Development (HUD) to keep habitual deadbeats from getting government loans when they have unpaid obligations. It's a federal government database that lists people who have blown off federally guaranteed debts or tax obligations.

CAIVRS contains delinquent borrower records from these agencies:

  • the Department of Housing and Urban Development (HUD)
  • the Department of Veterans Affairs (VA)
  • the Department of Education (DOE)
  • the Department of Agriculture (USDA)
  • the Small Business Administration (SBA)
  • the Federal Deposit Insurance Corporation (FDIC), and
  • the Department of Justice (DOJ).

When you buy a home or refinance, mortgage lenders must screen every FHA applicant for delinquencies on federal obligations. This step is required by law and impossible to get around. If you have applied for an FHA mortgage, VA home loan, or USDA Rural Development loan and are not delinquent on federal debt, then you have no worries--the check is just a formality.

If you come up on CAIVRS, you can fix it. If CAIVRS says that you are delinquent on federal debt or have had a claim paid in the last three years on a HUD loan, you cannot get government financing. You have to first pay off the debt or at least bring it current under an approved repayment plan. Then you must obtain a written copy of the plan from the creditor. (Federal IRS tax liens are allowed to stay unpaid if the IRS subordinates the tax lien to the FHA mortgage.)

If you are on CAIVRS by mistake, don't put a bag over your head. Don't be embarrassed--it happens all the time, and your lender can help you fix it. If you have cleared up an old problem, get your documentation in order and have the creditor call the CAIVRS line and go through the telephone script for government employees using CAIVRS.

Rules were meant to be broken. Of course, there are exceptions. If you come up on CAIVRS because of the following circumstances, you can still get your loan.

  • Assumptions: If you sold property, with or without a release of liability, to a buyer who then defaulted--and it can be proven that the loan was not in default at the time of the sale--you are in the clear.
  • Divorce: You may be okay and eligible if a divorce decree or legal separation agreement awarded the property and responsibility for payment to your ex, and if the loan was not in default until after the divorce was finalized.
  • Bankruptcy: If a property was included in a bankruptcy, and this bankruptcy was not your fault, you may still be eligible for the loan. Buying a huge and stupid boat, taking an ill-fated trip to Vegas, or "the dog ate my money" won't get you off the hook.

While they might insure your refinance mortgage or make you a new home loan when no one else will, the feds will also go to great lengths to collect. And they have more power to do so than anyone.


About The Author

Gina Pogol has been writing about mortgage and finance since 1994. In addition to a decade in mortgage lending, she has worked as a business credit systems consultant for Experian and as an accountant for Deloitte. She graduated with High Distinction from the University of Nevada with a BS in Financial Management.

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