In order to secure approval for a loan, an applicant must pass a CAIVRS screening. An acronym for the Credit Alert Interactive Voice Response System, CAIVRS is a database that contains the applicant’s federal delinquency history, created by the federal government. Used to track debtors with overdue payments by authorized employees, CAIVRS reports are compiled from:
- The Department of Veterans Affairs
- The Small Business Administration
- The Department of Education
- The Department of Agriculture
- The Department of Justice
- The Department of Housing and Urban Development
- The Federal Deposit Insurance Corporation
Part of the underwriting process, a borrowers appearance on a CAIVRS screening will not necessarily negate a bad credit mortgage, it will however prevent an applicant from receiving a VA, USDA, or FHA loan. The presence of a federal lien defaulted federal loans, or recorded federal loan claims all result in a CAIVRS listing. By law, all governmental division offering credit lines must put applicants through a CAIVRS screening.
An applicant who appears on CAIVRS may still receive financing with the presence of three specific situations:
Assumptions: If a property is sold, and the loan is assumed by the buyer; under the circumstance that the buyer defaults on the loan, the seller will still be able to receive financing in the future.
Divorce: An applicant is potentially still eligible for loan approval if the spouse of the individual was given the property that the loan secured and then defaulted on the mortgage following the finalization of a divorce.
Bankruptcy: If the mortgage was part of the applicant’s bankruptcy filing, and he/she can demonstrate these circumstances were out of their control, their eligibility will stay intact.
It is not uncommon for borrowers applying for a loan to incorrectly be put on CAIVRS. Fortunately, this is a resolvable issue. Your lender can determine who listed you and why, documenting the absence of late payments enables the lender to have you removed from the report.
Getting up to date on late payments will go a long way towards qualifying for a loan.
For more information about credit repair and underwriting guidelines for a VA loan, contact VA Home Loan Centers immediately.