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CAIVRS CLEARANCE

I defaulted on a HUD loan in 1996 during the last real estate bust and the loan was never paid.  I want to buy a house now while prices are low.  My credit score is around 720 now.  HUD says you can apply again for an FHA loan 2 years after a default/foreclosure, but you can't be on the CAIVRS list.  I can't get off the list unless I pay the loan - which I can't.  Do I have to pass a CAIVRS check with Homepath?
  • February 08 2011 - American River Parkway
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Answers (8)

Steve, great question, to clarifiy, FHA is 3 years after forclosure. 
and No CAIVARS on home path. However, you need to disclose that you have an outstanding federal debt on loan application under section F of the delcarations.
  • February 08 2011
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Perhaps you could try a conventional loan?

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  • February 08 2011
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Elizabeth birngs up a a great question about coventional loans. The standard Fannie mae and Freddie mac loan application will have the declaration sections E and F. which asks if you are presently delinquent or in default of a federal debt or loan. answered Yes, the reason for and current amount of defualt debt owed needs to be addressed and disclosed. In the current lending enviroment, I would carefully review and submit your loan application for a complete credit approval prior to writing an offer to purchase.  This would be true for all loan programs.
  • February 08 2011
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Justin is spot on and there's no CAIVRS with any conventional loan (HomePath is just a Fannie Mae loan where they pay for the MI if the financing exceeds 80% and Fannie owns the property).  Make sure you have your lender run your file through the automated underwriting system (Desktop Underwriter or DU). An automated approval for HomePath is not as easy to obtain as an automated FHA approval. I'm guessing you had an automated approval for FHA until they ran your CAIVRS.

Just in case... I should mention that they run a CAIVRS on all government loans (FHA, VA & USDA) so make sure to stick with Fannie & Freddie products to avoid the CAIVRS issue. Also keep in mind that HomePath is only an option when Fannie owns the property you're buying, so unless you have a specific property in mind it's usually not the right loan product for a pre-approval situation.

  • February 08 2011
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We found a home we want to buy and were informed we were fully approved for a USDA loan. 2 days later we found out we didn't pass the CAIVRS check due to a defaulted student loan. The home is a homepath home and I have read here and elsewhere that fannie mae homepath does not run a CAIVRS check. Is this still true? I am unbelievably stressed about this, thinking we were closing next week and now not even knowing if we're getting financed.
  • March 31 2012
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On a conventional loans some lenders will run CAIVRS; Fannie Mae requires due diligence in determining all your debt. Though it may not spell out to run CAIVRS the due diligence part implies that it should be run.

You would have already told your lender about the defaulted student loan anyhow when you completed your application so mainly they'll want to know what repayment arrangements you've made so that the debt can be properly counted in your debt to income ratio.
  • March 31 2012
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I was pre-approved for a loan through my employer/mortgage company. I too had a foreclosure 3 years ago. I was upfront with the loan officer from day one before I even took the loan application. She assured me verbally and in writing I was past my waiting period and that "FHA had pre-approved me". I questioned it numerous times, but she was 100% confident I would be a homeowner again. She could not have been more WRONG! Had she run the CAVIRS upfront, I would have avoided four months of running around with a fake pre-approval letter and wasting thousands of dollars and countless hours of my realtor's life.

Word of caution to anyone thinking about getting a mortgage with a bankruptcy, foreclosure in their past. Be completely honest with the loan officer, and make sure they not only do a full DU but also run a CAVIRS report BEFORE you engage a realtor and go down the painful rabbit hole I endured. What is truly the waiting period and what your credit report says can be TWO COMPLETELY DIFFERENT TIME PERIODS! I had almost 8 months difference and it cost me dearly!
  • February 17
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I'm so sorry you had to endure this. When I find myself representing sellers who have received a purchase offer from a buyer with a damaged credit history due to foreclosure, short sale or bankruptcy, I often ask them to run the application package through a mortgage lender I know who will hand-walk the paperwork through underwriting for approval. So many times, listing agents, selling agents and buyers don't get the whole picture until it's too late. With an underwriter's approval, buyers with damaged credit reports can show they can close. It's so much easier all around.
  • February 17
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