CAIVRS for Reverse Mortgages
To be eligible for HUD’s reverse mortgage program, the Home Equity Conversion Mortgage or HECM, you have to pass a CAIVRS check.What is CAIVRS? It’s sort of a “deadbeat database,” and it’s not a list you want to be on.
CAIVRS stands for Credit Alert Interactive Voice Response System.
CAIVRS was created by the federal government to track people who have unpaid federal debts or obligations, claims paid on direct or guaranteed federal loans, a federal lien, judgment or a federal loan that is currently in default or foreclosure, or 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); and
- the Department of Justice (DOJ).
All federal agencies that extend credit MUST pre-screen all applicants. If you apply for an FHA reverse mortgage and you turn up on CAIVRS, you can’t get your HECM. You can apply with a private reverse mortgage lender, which probably won’t care that you burned the federal government. Or you can correct the problem.
To get off CAIVRS, you have to pay the outstanding 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.)
You can still get your HECM, even if you had a claim paid on a government-backed home loan, in these cases:
- Assumptions: If you sold the property to someone who assumed your government loan and then defaulted, and it can be proven that the loan was not in default at the time of the sale, you are eligible for HECM loans.
- 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 reverseloan.
- 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 shouldn’t be listed on CAIVRS?
Mistakes happen, and if the government is wrong, you can straighten it out. Ask your reverse mortgage lender which agency reported you, and work with them to correct the information. It’s best if you provide both your lender and the reporting agency with the proof that you don’t owe the debt.