You may not have heard of CAIVRS (pronounced KAY-vers), but that doesn’t mean this database may not be critical in determining your ability to obtain a federal home loan.
CAIVRS, an acronym for the Credit Alert Verification Reporting System, was created in 1987 by the U.S. Department of Housing and Urban Development (HUD). Essentially, CAIVRS is a database that gives those processing federal credit loan applications the ability to search for individuals with potential credit problems in a centralized location.
Those loan processors are then able to review and prescreen applicants, checking whether the applicants have become delinquent or defaulted on any loans, as well as any other factors that make an individual or household a creditworthy applicant — or a risky one. If you are in the CAIVRS database due to delinquency or default on a federal loan, you will not be able to qualify for an FHA-backed loan until the problem is rectified or an error in inclusion is resolved.
Several government agencies are involved in making the CAIVRS program work. They maintain records that CAIVRS then uses to allow lenders to search an applicant’s creditworthiness, pulling information from the following departments.
Which agencies are involved with CAIVRS?
- HUD is a federal department that handles issues related to housing in the U.S., and is responsible for programs and policies that deal with housing needs. This department aims to provide adequate housing across the country, enforcing equitable housing policies.
- Lenders can gather information from HUD including bankruptcy status, divorce and legal assumptions such as whether an existing or prior home loan was current at the time of the legal assumption.
- Reports to CAIVRS if they have paid out an insurance claim on a loan on behalf of a borrower in the last three years.
- CAIVRS can also access exceptions such as whether, in the previous three years, an applicant has become a disaster victim or is a seller of a property that is a primary residence.
- HUD reports if an applicant is currently delinquent on an FHA loan.
- The Department of Veterans Affairs (VA)
- The VA provides resources for current and former members of the U.S. military, including health care, education, disability services and financial assistance for veterans seeking homeownership, among others.
- Offers mortgage programs that include lower mortgage rates and assistance such as no or low down payment offers.
- If a veteran is applying for a government-backed home loan, including a VA loan, lenders will still search for those individuals on CAIVRS to ensure veracity of the Verification of VA Benefits.
- The VA will submit to CAIVRS information on delinquencies and defaults, and whether insurance claims have been paid back by VA programs.This applies to loans backed by the federal government, including the Interest Rate Reduction Refinance Loan (IRRRL) program and the Native American Direct Loan (NADL) program.
- The Department of Education (DOE)
- The DOE creates policies regarding education, financial aid for students and schools, as well as how to oversee the distribution of DOE funds. It also manages and distributes student loans.
- The DOE provides to CAIVRS student loan status, including whether a recipient of a student loan has become delinquent on or deferred his or her loans backed by the U.S. government.
- The Department of Agriculture (USDA)
- The USDA offers loans for those in rural areas. The USDA loan is designed to help first-time homebuyers and others who have trouble securing a standard loan to obtain mortgages with low and fixed interest rates and no down payment.
- The USDA will report information on loans to CAIVRS, including whether an applicant has defaulted on a loan, entered delinquency or submitted claims on federally supported loans such as the Single Family Housing Repair Loan and the Single Family Housing Direct Loan.
- The Small Business Administration (SBA)
- Through partner lenders, the SBA helps set guidelines to make it easier for small business owners to get loans for their business.
- The SBA will submit information on any applicant who defaults or enters delinquency on these loans.
- The Federal Deposit Insurance Corporation (FDIC)
- The FDIC insures deposits of at least $250,000 at banks and other financial institutions, evaluating and reducing risk for consumers.
- Reports to CAIVRS when borrowers have entered delinquency.
- The Department of Justice (DOJ)
- The DOJ keeps records on those who have not paid back court fees.
- These debtor files are reported to CAIVRS.
How to determine if you have a clear CAIVRS report
Unfortunately, consumers can’t check for themselves to see whether they are in the CAIVRS database, as it was designed for lenders to check the financial status of potential borrowers seeking FHA-backed loans.
If you would like to know whether you’re currently in the CAIVRS database, approach your lender and ask them to initiate a CAIVRS report search. If you’re on CAIVRS, you won’t qualify for federal mortgages, so the earlier in the process that you seek out this information, the better.
Your potential lender will need your tax ID or Social Security number to run this check. After the lender has entered this information, HUD will inform the lender of your current status, including whether your name shows up in CAIVRS and why. You may wind up in CAIVRS for a number of reasons — defaulting on a previous mortgage, being delinquent on a student loan or for any of the other issues listed above.
How long do delinquencies stay on CAIVRS?
If you show up in the CAIVRS database due to delinquencies on federal debt, you won’t qualify for any FHA-backed loans. However, you won’t stay on CAIVRS forever if you rectify your financial situation and stay current on your payments going forward. Those on CAIVRS will remain on the database for a three-year waiting period, after which they will be able to qualify for FHA loans, if eligible at that time.
Are there exceptions to this rule?
Not everyone who has entered delinquency or defaulted on a loan will appear on CAIVRS. If you meet any of the following exceptions, you may still be eligible for FHA-supported loans:
- If you were forced into bankruptcy due to long-term illnesses, an illness that was not insured or the death of the primary household income source, you may still qualify for federal loans.
- If the primary loan buyer qualified for an FHA-backed loan, then defaulted on it, you may still qualify for a government loan. To prove eligibility, you must provide information showing that the loan was not currently in default status when you sold your previous home.
- Disaster victims
- Disaster victims will still qualify for federal loans if they can prove they were current on a loan before the disaster occurred.
- If, during divorce proceedings, your ex-spouse was awarded your then-home or property, you may still be eligible to receive funding for a federal loan.
What if you are on CAIVRS by mistake?
If you believe you have been placed on the CAIVRS database in error, you will have to act through your lender to remove yourself from it. Most often, those who have been incorrectly placed in the database got there by having their identity stolen.
When the perpetrator stole your identity to acquire, and then default on, a loan, that series of events may have caused you to end up on CAIVRS. You must work with your lender to prove you did not obtain, then default on, the loan in question in order to remove yourself from the database.
Once you find yourself in the CAIVRS database, you can be prevented from qualifying for a federally backed loan, adding additional challenges to buying a home for both first-time and repeat homebuyers.
However, there are ways to remove yourself from CAIVRS to still qualify for a loan. Get in touch with your lender as early as possible in the homebuying process to find out whether you’re in this database. If you are, take the necessary steps to get yourself removed, if possible, to ensure that buying a home with an FHA-backed loan remains an option.