77°F
weather icon Partly Cloudy

CAIVRS database will lock you out of FHA mortgage

If you’ve failed to make good on money you’ve borrowed from the government but want a Federal Housing Administration mortgage, a little-known federal database could halt your dreams of homeownership. It’s known as the Credit Alert Interactive Voice Response System, or CAIVRS.

What is it?

Maintained by the Department of Housing and Urban Development, CAIVRS keeps a record of anyone who has borrowed money from the federal government, such as a home loan, Small Business Administration loan or student loan and defaulted on that debt within the past three years. FHA lenders access the system via phone or online to determine where a potential borrower stands.

“One of the very first things that people should do is make themselves aware of the fact that this database exists,” says Bruce McClary, a spokesman for the National Foundation for Credit Counseling. “It’s surprising how many people don’t know that this database is out there and that records are being kept.”

CAIVRS contains the Social Security numbers of more than 1 million borrowers with various forms of government debt. As of September 2015, the share of those borrowers who were in default on an FHA single-family mortgage was 289,436.

CAIVRS could limit your loan options

A prospective first-time buyer with limited down payment funds might consider an FHA loan as the most plausible choice for financing a home purchase. But if the borrower already has federal debt — a student loan, for example — that hasn’t been repaid and has entered default status, an FHA mortgage comes off the table.

“If the database is preventing you from getting a federal loan, then you do have to turn toward some of your options among private lenders,” McClary says, “and even there, you’re going to be at the mercy of your credit history.”

That same info in CAIVRS could show up on your credit report in the form of a lien or judgment, he adds.

How to determine your CAIVRS status

The public doesn’t have access to CAIVRS, so you must consult an FHA-approved lender to learn whether you’re in the system. Have this taken care of during the early stages of the homebuying process, McClary says.

“(Borrowers) really should not make any firm commitment until they have that database checked to make sure that there’s nothing on there that would stop the deal,” he says. “You shouldn’t enter into an agreement; you shouldn’t pay any fees to a broker.”

Are there ways around it?

Not all hope is lost if you’re listed in CAIVRS but still want an FHA loan. You may either arrange a repayment plan with the debt holder or pay the debt in full, according to the HUD website. If you work out a repayment plan, you must obtain documentation from the debt holder to show HUD that the debt is current.

“Then you can work around what’s in the database and work with a lender to get approved for a federal loan,” McClary says.

However, if your defaulted debt is a foreclosed FHA loan, you won’t be able to apply for a new FHA loan until three years after HUD pays your previous lender for the claim associated with your mortgage foreclosure.

Boomerang buyers — former homeowners who went through foreclosure and now want to own again — could find themselves in this sort of situation, says Daren Blomquist, vice president at real estate information firm RealtyTrac.

“The first hurdle they have to really overcome is having that ding on their credit score removed, which takes time,” he says.

Don't miss the big stories. Like us on Facebook.
THE LATEST
American Homes 4 Rent enters local housing market

California-based American Homes 4 Rent, which has already acquired, renovated and leased single-family homes in Las Vegas, has made its first move to what it has also done in some other markets — build single-family homes to rent like it has in 14 other markets.

Northwest resorts cater to homeowners with outdoor lifestyle

The proximity to outdoor recreation areas has helped fuel home buying in the northwest valley that in turn has created a built-in audience that’s spurring expansion and improvements in the resort industry in the nearby mountains.

New home sales soar in North Las Vegas

There’s a significant and sudden shift in the landscape of the Southern Nevada new-home market that shows no signs of slowing over the next several years.

Del Webb to open two age-qualified communities

Retirees account for about 26 percent of the area’s approximately 2 million residents, meaning more than 600,000 people in Vegas are over the age of 55.

Toll Brothers wins Silver Nugget Award for best kitchen

Aptly named Shadow Point, Toll Brothers’ new community is nestled under the shadow of the Spring Mountains. Using natural materials and layering textures, the Eclipse Elite model home’s kitchen reflects the beauty of the surrounding landscape.

Richard Plaster wins Lifetime Achievement Award

Richard Plaster has seen Las Vegas grow up as a city over the last 45 years, and his legacy is helping make that happen.

Del Webb to open two age-qualified communities

Retirees account for about 26 percent of the area’s approximately 2 million residents, meaning more than 600,000 people in Vegas are over the age of 55.

Several factors play into new home sales dip

New home sales in the four leading master-planned communities in Las Vegas are down during the first six months of 2019, but builders and analysts said they wouldn’t be surprised if they finish the year even or ahead of 2018.

Several factors play into new home sales dip

New home sales in the four leading master-planned communities in Las Vegas are down during the first six months of 2019, but builders and analysts said they wouldn’t be surprised if they finish the year even or ahead of 2018.