What is a CAIVRS check? How does it impact you when applying for a mortgage? A CAIVRS check is an important underwriting requirement that mortgage lenders must complete before they can close a federally-backed HECM reverse mortgage or traditional VA or FHA mortgage.
What is a CAIVRS check?
CAIVRS (often pronounced “ky-vers” by industry professionals) stands for Credit Alert Interactive Voice Response System. Lenders are required to run your name through CAIVRS when you apply for a HECM reverse mortgage or a traditional “forward” VA or FHA mortgage. Mortgage lenders use the CAIVRS system to determine if you have unpaid federal taxes or delinquent federal debts.
It may sound harsh, but the federal government doesn’t want to help people borrow more government-backed money if they already owe delinquent debt to the federal government. HECM reverse mortgages and traditional VA and FHA mortgages are backed by the government. If a borrower with one of these types of mortgages defaults and goes into foreclosure, the lender can file a claim with the federal government for losses suffered as a result of the foreclosure.
If you have delinquent or defaulted federal debt
If you have delinquent federal taxes, you may still be able to qualify for a HECM or traditional VA or FHA mortgage. The lender will likely require that you use the proceeds of the new mortgage to clear the outstanding tax debt.
If VA or FHA paid out an actual claim as a result of a foreclosure, you will not be eligible for a federally-backed loan through the VA or FHA (including a HECM reverse mortgage) for three years. You may be able to get around this limitation if you can document a valid extenuating circumstance beyond your control that led directly to the foreclosure (such as divorce, death of a spouse, etc.).