Understanding the FHA CAIVRS Check
To be eligible for FHA or any other government-backed mortgage program, you have to pass a CAIVRS check. What is the FHA CAIVRS? Well, although it's pronounced "cavers," it has nothing to do with bats or subterranean caverns.
CAIVRS stands for credit alert interactive voice response system, and is a database created by the federal government to track people who have skipped out on federal debts or obligations, have had claims paid on direct or guaranteed federal loans, have a federal lien, judgment or a federal loan that is currently in default or foreclosure, or have had a claim paid by a reporting agency like FHA or the VA.
CAIVRS contains delinquency records from:
- 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)
- The Department of Justice (DOJ)
All federal agencies that extend credit MUST pre-screen all applicants. If you apply for an FHA mortgage and have paid federal debts as agreed, then you have no worries–the check is just a formality.
However, if you turn up on CAIVRS, you can’t get an FHA mortgage. You will have to pay the debt in full, show that you’re listed in error or that you fall under one of the exceptions below, or bring your past-due account current under a repayment plan. If your payment plan is approved, get a written copy of it from the debt holder, and your name may be cleared. (Federal IRS tax liens may remain unpaid provided the IRS subordinates the tax lien to the FHA mortgage.)
Exceptions to this “deadbeat database” rule may be granted:
- Assumptions: If you sold the property to someone who assumed your government loan and then defaulted, and it can be established that the loan was not in default at the time of the sale, you are eligible for FHA financing.
- Divorce: You may be eligible if the divorce decree or legal separation agreement awarded the property and payment is to your ex. However, if a claim was paid on a mortgage in default at the time of the divorce, you are not eligible for an FHA loan .
- Bankruptcy: When the property was included in a bankruptcy that was caused by circumstances beyond your control (such as the death of the principal wage earner, loss of employment due to factory closing, reductions-in-force, etc., or serious long-term illness), you may be eligible
What if you're on CAIVRS by mistake?
It’s not that uncommon, and you don't have to put a bag on your head or change your name. Ask your lender which agency reported you, and then you can straighten everything out. It’s best if you provide both your lender and the reporting agency with the proof that you paid the debt. CAIVRS comes up very early in the mortgage process (before your lender can get you an FHA case number, they have to check CAIVRS), so a mistake might not hold up your closing. Of course, this is just one more reason to get preapproved for your FHA mortgage before you go home shopping.