Monday, March 17, 2008

Underwriting Denial Because of CAIVRS Report

I Received this email from Mike early this morning.

I had recently applied for a loan through a major bank, and had gone through the whole process, only to have been told that the underwriter wouldn’t approve the loan unless the CAIVRS report was removed. Unfortunately, I had to file chapter 7 bankruptcy and included my house, which had been financed through an FHA loan. Upon further investigation, the mortgage loan officer said that because there was a foreclosure, that the underwriter wouldn’t approve the loan. They told me to contact HUD, who told me that the claim couldn’t be removed, and that it was just a credit alert, and that it was just up to the lender whether they pay attention to it or not.

I had told this mortgage company exactly what had happened in the past, they ran my credit, and there was no indication that there was going to be a problem. I had applied for the new loan here recently, March 2008, and the chapter 7 Bankruptcy had discharged in December 2003. I looked on the State/county auditor’s website and noticed that the property I had defaulted on had changed title to HUD in 2003, and then into someone else’s name in April 2005.

I have since reapplied with another mortgage broker, who says he doesn’t see a problem, though I’m a bit concerned that I am going to have to pay all the costs all over again for nothing. The appraisal I got originally is not an approved person for the broker I am using now, so I’m having to pay another 300.00.

What kind of stumbling block was hit with the original mortgage company, and how can I think that this new company, using a broker, can give me a better chance of financing this loan? I’ve been told that I can’t go FHA because of the CAIVRS, but the issue is well over three years, unless they’re basing their decision on some other date that I can’t see, like a mortgage insurance claim, or something like that.

I’m a bit confused, and could use your help, advice, or attention, and an explanation, if you could please!

Thank you,

Mike


Answer: (updated 2012)

First, you need to understand that a CAIVRS report is only pulled on an FHA or VA loan  pulled on almost all loans now depending on the lender. You always need a clear CAIVRS to get an FHA loan, VA loan, or a USDA loan. I don't know of any lenders that will grant a loan if they know CAIVRS is not clear. A CAIVRS should have been checked up front to save you the expense and time delay. The bank should have known this.

If you were not applying for an FHA loan the bank should not have pulled a CAIVRS at all unless they are running scared because of the industry issues. Banks are really getting paranoid and have always been cookie cutter conservative.

A reputable Broker is always the best place to get a mortgage. It is the only thing they do and they usually have 40 to 60 lenders to send your loan to and they shop the interest rates for you. A good Broker will always try to place you in the best product at the lowest rate available.

Banks specialize in checking, savings, credit cards, and small loans. Their Mortgage Department, in most banks, cherry pick the loans they want to do. I know Brokers are getting a bad rap right now but that is because the large lenders are not willing to take the heat for funding loans that didn't qualify or for lowering the standards so far that people defaulted. Trust me, the independant broker doesn't set the standards. They have to operate by them or they can't get their loan funded.

Sorry I got a little off topic but I just hate seeing people get jacked around.

Based on the discharge date, you should qualify for conventional financing if you have re-established credit and no lates since the bankruptcy. Seems to me the bank should have switched it to conventional.

This is based on the information you provided. Naturally you would still have to qualify based on other factors such as income, DTI, and down payment.

Best of Luck,

Connie


(added 2012)

The following link should help anyone with caivrs questions and it has a link to the Caivrs page near the bottom.



45 comments:

  1. Why do they do that, "jack people around". Don't they know their stuff. Maybe their employees are not trained, ...?? My last experience was a nightmare and we just couldn't understand why.

    Love your blog, you need to post more often.

    Peggy

    ReplyDelete
  2. I am a broker in Atlanta, Georgia. There is no reason for this client to be treated this way.

    Our policy is to check CAIVRS on FHA and Va mortgages when the process starts.

    www.peachstatemortgage.com

    ReplyDelete
    Replies
    1. Well CREFCO doesn't check it. I have been working with them for 3 1/2 months and just found out yesterday after it went to the USDA that I have a CAIVRS alert. I have wasted 3 1/2 months and $500 for an appraisail.

      Delete
  3. The same thing is happening to me. I co-signed an FHA Loan that was foreclosed upon in Nov 2004. I provided the credit report and court documents stating this date to a broker, who said it shouldn't be a problem. During the underwriters process, CAIVRS showed another date, which put me under the 3 year waiting period. I stand to lose $1,000 in earnest money and $700 in appraisal and inspection fees. Are people this careless and unprofessional? And who is responsible for correcting what CAIVRS report? I have proof that the CAIVRS system is wrong!

    ReplyDelete
  4. If a person had a FHA mortgage in the past that was foreclosed upon, say 5 years + . Will they ever pass muster regarding underwriting a mortgage for them regardless of how well the rebuild their credit history?

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  5. This comment has been removed by a blog administrator.

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  6. My husband and I are in the middle of a CAVIRS nightmare. He was married before to a woman with bad credit. When they divorced, he jut gave her the house, but failed to get the proper paperwork clearing himself from the mortgage. That wasn't 3 years ago, and had recently had to have the divorce decree re-done to show that he was no longer responsible for the loan. She defaulted on the house, but it's coming up as a bad CAVIRS report in his name. We want to get a house now and are waiting on the word from HUD as to whether changing the divorce decree did the trick.

    ReplyDelete
    Replies
    1. It is your husband's fault for not getting his divorce completed correctly.

      Delete
  7. I had a foreclosure in Nov., 2006. I have applied for and been approved for a new mortgage from a new mortgage company. Because it is an FHA insured type of mortgage, a CAIVRS was run when the loan was put through to FHA. Somewhere along the way, paperwork must have gotten lost in the shuffle, because I found out today that the claim to cover the mortgage (Insurance) wasn't filed or paid until January of 2009. I talked to FHA today and found out that it doesn't matter when the foreclosure happened. What matters is the date that the FHA insurance claim was filed by the bank and when the claim was paid. Because it took over 2 yrs from the time of the foreclosure until the time the claim was paid, I am not eligible for another FHA insured mortgage until 2012. This means I will have to wait almost 6 years to get another mortgage. I am currently seeing if anything can be done,but it does not look promising. I cannot afford to go conventional because of the large downpayment required. To me this sounds really stupid. Oh well, so much for the government trying to help the little guy in a tough economy.

    ReplyDelete
    Replies
    1. I am going throught this same situation right now.. Were you able to get this resolved? If so how..Please help

      Delete
    2. I am in a similar situation. Ended up in a short sale which closed in July 2010 but the FHA claim was not paid until January 2012. 18 months later which is no excuse in my opinion. If it is indeed up to the banks to file the claim, it does not surprise me since it was BoA. They are very incompetent. I feel your pain.

      Delete
    3. Exact same situation...short sale in June, 2010 - BoA submitted claim in Sept, 2010 but HUD did not pay it until Nov, 2011...

      Delete
    4. wow we just applied for a loan three years after foreclosure and were told everything looks good. We do not know when the house went up for auction, but the mortgage company is now giving us the silent treatment

      Delete
    5. Unfortunately, I had the same thing happen. We were pre-approved for a VA loan, found a house, started escrow and the lender's underwriters ran CAIVRS at that time. We also paid $230.00 for a home inspection which we are out because the lender failed to check the CAIVRS site at the time the credit report was ran. It doesn't matter when the bankruptcy or foreclosure happened as they go by the date an insurance claim was made and it's three years from that date for an FHA or VA loan. It doesn't apply for conventional loans so that is up to the lender.

      Delete
  8. I'm in the process of trying to purchase a home and today the Realator told me that I would need a Co-buyer because the underwriter won't accept my childsupport paymens as part of my income which are paid montly and I have a court order for them and will continue getting them for the next 10yrs.

    ReplyDelete
  9. If you cannot document receipt of the payments the underwriter generally will not use them in your income. If he is paying through the courts you can get a court print out of all his past payments. That ususally works. Or, if he will provide copies of his cancelled checks.

    If he sends you the checks directly, in the future make a copy of the check, and when you deposit it into you account deposit only that check and keep your deposit slips. There must be a paper trail.

    ReplyDelete
  10. After being led around and told everything is great, 20 hours before my loan closing, I was told I'd been denided my mortgage loan. They said it was due to the date my home was taken out of my name and sold at public auction due to a chapter 13 filed in 2007. I was very open and told my originator from the very begining about this, the reason why, etc. I was told it was not a problem and kept going through the process. After all this, now they said I could close after the date it was sold at auction... I still have never recieved a turn down letter or anything in writing since the phone call from the originator. Isn't this against the fair lending law? Its now been 2 weeks, still nothing in writing about why I was turned down etc.. I'm being told the law states you have to be given a notice in writing. What should I do?

    ReplyDelete
  11. wingster7045
    Almost 7 years ago i went thru a terrible divorce. I had two properties my first was valued at 55K. The second one I sold for 209K and everyone was suppose to be paid off before settlement so i was told. My ex-wife's lawyer froze my rental property preventing me from selling same till the last three days before foreclosure(slick move) As I tried to sell same the buyer waited till forclosure to purchase the property. I sold my main residence and for 6 years had no credit card and tried to keep my credit in a redeamable state. Now I found that creditors that were paid off were still reporting negative reports. That was straighten out one cell phone company still showed for $800.00 that was suppose to be paid off. Here is the big thing there were two forclosures showing on my account I found out that the house i sold was showing as a foreclosure we straighten that out and the derrogatory info on my credit was solved shooting my score to a 699 698 702 with the rental foreclosure due to fall off on april of 11. I provided all information and documentation including child support reduction( I won custody) and credit restructure. plus i am a veteran What are my chances they put my account in a suspension status until all paper work requested is in. All paperwork has been sent. Do I have a chance or no because this process is like pulling teeth. Very painful and stressful. Are the underwriters jerking me off or do you think they are helping me out. I just need to know

    ReplyDelete
  12. Am trying to close a reverse that will clear the default CAVIRS. Reverse bank will not close with a cavirs default reported. Wells Fargo is no help trying to lift the reporting (other than they would be happy to steal my deal and then they would lift the cavirs)...Any suggestions? somebody in underwriting at Bank should know what to do - but they don't seem to want to. Meanwhile a little old lady is faced with losing her home...

    ReplyDelete
  13. Go here for procedure: http://www.fhaoutreach.gov/FHAHandbook/prod/infomap.asp?address=4155-1.4.A.8.f

    In addition you might want to contact you local FHA Home Ownership center...

    Good Luck,

    Jerry

    ReplyDelete
    Replies
    1. FHA jerks uou around too. I tried them and they said that it takes three years and 45 days for CAIVRS report to clear. Even then, you have to call them and make sure it was.

      Delete
  14. I have been told that a real estate agent cannot work with a buyer or seller that is using an FHA or VA loan, if the real estate agent is on the CAIVERS list. Is this true?

    ReplyDelete
  15. My husband and I were in the closing process of our home we were pre approved months ago and given the go ahead to look for a home.
    well after paying earnest, apprisal, and inspection cost, the under writter told us we would have to pay child support arrears. Now my husband has always paid his his support, but several years ago he fell and tore his rotaters culf, and was off a while but when he went back to work they continue to take out of his check but now it is in arrears. Im not angry bout the support issue, but why didnt the bank tell us this before we paid all this money up front, we could have been paying that on the arrears and been done. what ca n we do to get back our money from these people.

    ReplyDelete
  16. A mortgage is a loan which is secured against your home. A mortgage is a method of using property (real or personal).

    ReplyDelete
  17. I am reported on the Caivrs database for a student loan that is not and was not mine. As I've told my story to others, I'm shocked at the number of people who also say there is inaccurate info on them in the Caivrs, much of which is IRS. Sure seems like the govt may offer higher than private sector 6 figure jobs, but most agencies certainly have difficulty in doing their job without errors. Personally, I feel the govt ought to get out of the lives of citizens and if there are errors in ANY govt database, it should not be a nightmare to rectify. Talk about abuse of power...

    ReplyDelete
  18. I had been searching constantly for the past week to find out if a previous delinquent student loan would show up on CAIVRS. Could not find a clear answer anywhere - all I saw was that if your loan was in default it needed to be made current. Nowhere did it say, as long as your loan is current you will not show up on CAIVRS. Maybe how it was worded was good enough, but for me it wasn't clear. Well I just got the green light that we did not show up on CAIVRS. So anyone who shows a delinquent payment on their credit report fret not if you've made the loan current since. Also FYI may last late payment was 1 year ago. I had read some postings online that I needed to not have any late payments for the last 2 years!!!!

    ReplyDelete
  19. If you come up on CAIVERS there will be a claim number and a phone number to call. You should call them and find out what you need to do to get off their list.

    Many Lenders require a 36 month period after your claim has been resolved before they will consider your application.

    It is a little more complicated than that but with most lenders even a high credit score will not override that time frame.

    ReplyDelete
    Replies
    1. I have found out that my name will taken off of the CAIVRS list September 10, 2013. Am I able to be preapproved for a mortgage loan and begin the process a little before September, since it will take a while to close anyway just due to normal underwriting delays, etc?

      I also have found information that it may take up to 45 days beyond the date that your name is due to come off of the Caivrs list, to actually show cleared, is this accurate information?

      Should I not bid on a home, or begin the pre approval process prior to September 10, 2013?

      Thank you.

      Delete
  20. OMG! I am a processor and a mortgage UW and I am disgusted!

    Contact an attorney that specializes in Real Estate. Anonymous you by all means have the right to know if you were approved or not.

    Time limit about 2 wks but it is policy that they in writing let you know that you were not approved and a clear explanation as to why.




    Your Loan Originator should have been very clear up front that it would be risky to obtain the loan. He should have (first and foremost)thought of the benefit to you... #1 importance of approving a loan is BENEFIT TO BORROWER!! If he was an honest and experienced Loan Officer then he would have been upfront and told you that you would never have been approved. Maybe even give you some idea of how you can resolve the issue so that you can eventually purchase/refinance whichever is applicable. So in short there are lenders out there that really do care about their customers. I know I do and it is too bad that this so called originators give a bad name to mortgage companies... especially good ones.

    ReplyDelete
  21. We had been pre approved for a VA loan and had found a house and started the process, paid our $500 earnest money, $300 for an inspection. The loan went to the lender and CAIVRS reared it's ugly head. We filed for BK in Jan. 2008, discharged in Nov., 2008 and let the house go as part of it. Countrywide (now BAC) did not file a CAIVRS claim until Jan. 2010, so now they are telling us we have to wait until Jan.2013 to get our VA loan. Question: Is there a time limit for the lender to file a CAIVRS claim with HUD when a home is included in a BK? If there isn't, WHY NOT!!!??? I work in the HUD housing industry, and we are required by HUD to file any claims within 6 months for tenants that have moved out and caused damage. Isn't the mortgage industry regulated in this way? It sure should be!

    ReplyDelete
  22. could someone please tell me who do i get in contact with to remove our caivrs report. we were cleared on sept 6 of this year. now we cant get it removed yet. who do i call or contact to get it off we cant move on with our loan till it is off the list.

    ReplyDelete
    Replies
    1. Hello Anonymous, I have a similar concern about my name being cleared off of a caivrs report this coming september. Did you end up getting your name removed from the list and obtaining a loan approval? How long did it take 45 days beyond Sept. 6th? I had been told that it takes an additional 45 days beyond the date that is given to you. Any information you can provide me with is greatly appreciated. Thank you.

      Delete
  23. I am like most of you. I first went to the Credit Union to get preapproved for a mortgage. I didn't want to waste any time or money if for some reason I could not qualify for a loan. I was preapproved, found a home, paid ernest money, appraisal fees, inspeciton fees, only to find out that caivers has my social security number belonging to someone else who purchased a home in another state and foreclosed on the property. So after that I could not get the loan. It was suppose to be cleared up 2 months ago and still isn't. I lost the home plus all the fees I paid out. So now I had to rent another place and I am working on trying to get this cleared up. And this foreclosure has never showed up on my credit report. I have never purchased a home much less foreclosed on one. VERY SAD that people can have this much control over a innocent persons life.

    ReplyDelete
  24. Seems to me that a lender should check this during the pre-approval process and not wait till just before closing. Unfortunately I don't know of anywhere you can go on-line to check it yourself. Sucks.

    ReplyDelete
  25. I am in the process of refinancing home mortgage when the broker states caivrs report came back on my ss # stating I defaulted on some property I never had, This is clearly a mistake. Broker telling me that there must have been an incorrect ss# entered because the report does not have mu name. Now lender states I need proof, other than my ss card, showing SS # is actually my number. I have no passport or other means of proof. Where do I go or what do I do?

    Jerry

    ReplyDelete
  26. Jerry,

    The following link should help you and it has a link to the Caivrs page near the bottom.
    http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/ref/sfhp2-09

    ReplyDelete
  27. Debtors filing for bankruptcy are allowed to keep certain assets.
    Chapter 7, also referred to as a straight bankruptcy, is just
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    can simplify the manner of filling bankruptcy without
    having an lawyer.
    Have a look at my blog post : central FL bankruptcy

    ReplyDelete
  28. I was supposed to close on my house December the 21st and on December 21st found out my name was on the caivers.... I had packed got movers and bought appliances for my new home, the lender did not check until the last minute I don't know what to do I need to be out of my apartment by the 30th of December.... this practice of how some Lenders treat clients is so unprofessional....I understand the caivers and the process. I had a short sale November 2009... I was told 45 days from the date the loan was paid off my name should fall off the Caivers but in the process I might lose the house I want.

    ReplyDelete
  29. I had did a shortsale June 2009, had lost my job in Maryland due to layoffs. So, I found a job in Michigan 536 miles away from the home. Rented out until the lady lost her job, it was just to much to hang onto. Did a short sale. So, I waited my 3 years to find out that the government did not pay off the loan till July 2010. The 3 year clock start then. Two days before closing they ran a caivrs report to till me they could not do anything until it was cleared.

    ReplyDelete
  30. I myself had an FHA short sale back in 2011 and now I'm trying to do a VA loan on a home we are building and we ran into this CAIVRS list. My lender at the time basically told me the VA wants the CAIVRS cleared, or I could wait another 14 months for it to fall off, or switch to a Conventional Loan and put 20% down to get a loan 2 years after a short sale. Well none of those were good options for me so I began looking online.

    After doing a lot of research for this myself and I wanted to pass along what I discovered. First off, FHA/HUD will not remove a person from the CAIVRS list before the 3 year 1 day waiting period unless the person was put on their incorrectly or they qualify for one of three exceptions (bankruptcy over 2 years ago, divorce where mortgage was assumed by spouse before short sale, and death of a spouse I believe). In my situation I was trying to do a VA loan at the 2 year mark (which was what I had found was the standard wait time for VA after a short sale) and I ran into the CAIVRS road block. Our lender told us originally that the VA will not guarantee a loan if a customer is on the CAIVRS list and it has to be clear, which as I explained above is not going to happen.

    The good news is I did a TON of digging and calling and here is what I found: By calling my local VA regional loan center (St. Paul, MN 1-800-827-0611 option 3) I found that the VA really doesn't follow the 2 year mark anymore. That was an older rule that they followed with the housing market collaspsed. But as they told me, most short sales were done not out of financial hardship but more because people can't get their homes appraised for what they owe. So they told me that as soon as 6 months after a short sale you can get approved if you have good credit.

    Now the trick is, what about CAIVRS? Well I was told they follow two specifc exceptions to guaranteeing a loan even if you are on CAIVRS. The first is if you have an established payment plan in place. The second would be if you could prove you do not owe the federal goverment a debt. Below is the link verbiage the VA sent me:

    Please open up this link below and go to page 4-36&4-37(34 out of 65 in Microsoft word) and you will see what I was able to locate. http://www.benefits.va.gov/warms/pam26_7.asp

    ReplyDelete
  31. (Cont) Of course the VA doesn't have any of these written anywhere so you either have to call them and verify or have a lender that has dealt with this before.

    Now in my case I took part in the Pre Foreclosure Sale to do my Short Sale and was able to successfully close on my home within a few months. This was key because the Pre Foreclosure Sale Program specifically says that a "mortgagor (myself) that successfully sells their home under this program is relieved of their mortgage obligation." Check out the HUD mortgagee letter 2008-43 (page 15, section P, first sentence) to verify what I submitted to my loan officer. Just do a google search and you'll find it.

    So with that along with the Approval to participate in the Pre Foreclosure Program letter I received, I was able to prove to my lender that I no longer owed the federal government a debt which is what the VA says they need in case they ever audit the lender's files. That's big too because the lender submits a bunch of loan approvals and it is only if they audit them that this would come up and then the Lender would need documentation of why they approved this loan. Because Lenders are so worried about mortgages not being insured/guaranteed, they will overscutinize a loan.

    To take this another step further, I even called HUD myself (which thankfully I found a good number) at the HUD National Servicing Center (1-877-622-8525, option 1) and was able to give them my name and FHA case # and they flat out told me that HUD nor my bank would come after me for any deficiencies. The people I spoke to basically say they mainly go after those who walked away from their property or had multiple foreclosures in the past (go to http://www.hud.gov and then do a search for judgements and you'll find stuff on this). I also emailed FhaSfclaims@hud.gov and asked them if I owe a debt and their response was " No, there should be no deficiency that HUD would require you to repay for a claim paid on a single family mortgage preforeclosure sale."

    I hope this helps those of you out there that are in my type of situation and run into this problem. CAIVRS is going to become more and more popular since those of us with a short sale are now looking at buying again and about half of the lenders I called even knew it existed. But keep in mind, this isn't on your Credit Report and CAIVRS is only ran during underwriting so if you have a short sale I would advise your lender to run that CAIVRS report right away because it will save you some time and headaches! My lender knew about this and was able to manually approve our loan and so we are moving into our new house in September! Good luck everyone!

    ReplyDelete
    Replies
    1. Great information, who was your lender?

      Delete
  32. Yea, please tell us who your lender was that was willing to work with you through the CAIVRS issue.

    ReplyDelete
  33. I ran into the frustration of getting a clear caivrs report even though it has past my 3 years from the claim date. I found a contact that I got from HUD that got it resolve within hours of contact the technician . He had to go in and manually and remove it. The email is sfdatarequests@hud.gov

    ReplyDelete
  34. How can a CAIVRS report get registered against us after we were discharged in chapter 7? Our responsibility was judicially closed, and the house was surrendered in bankruptcy. Discharge was March 2011, yet sheriff sale wasn't until August 2013. How can we still be "penalized" by CAIVRS when our responsibility ended over two years beforehand? I am really frustrated.

    ReplyDelete

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