A federal government created database, the Credit Alert Interactive Voice Response System is used by authorized employees to track delinquent debtors.
Delinquency records included in CAIVRS come from:
- The Department of Education
- The Small Business Administration
- The Department of Justice
- The Federal Deposit Insurance Corporation
- The Department of Housing and Urban Development
- The Department of Veterans Affairs
- The Department of Agriculture
While appearing on a CAIVRS screen won’t preclude a bad credit mortgage, it will prevent a potential borrower from qualifying for a government loan. People who owe money on federal loans, have a federal lien in place, have claims on federal loans, or have defaulted on a federal loan all appear on CAIVRS. All government agencies that offer lines of credit are required by law to pre-screen applicants.
Three circumstances exist that would negate a borrower who shows up on CAIVRS from being denied financing:
Divorce: You may still qualify for a loan if property was awarded to the other party involved and they assumed responsibility for payment, and defaulted on the payment after the divorce was finalized.
Bankruptcy: Eligibility remains if the property was included in a bankruptcy filing, and the circumstances can be proven to have been out of your control.
Assumptions: Selling your property to a buyer who assumed the loan and then defaulted will not impact your eligibility.
Commonly, applicants will discover that they mistakenly appear on CAIVRS. This is an easily resolved issue. Contact your lender and find out which agency has listed you. Providing documentation to the lender illustrating up to date payments will allow your lender to get you removed from CAIVRS.
If you owe the Federal Government money, get current on your payments before shopping for a home.
To learn more about your eligibility for a USDA loan contact FedHome Loan Centers.