April 17, 2015
A reader asks, “We have some questions regarding applying for a mortgage. we have extenuating circumstances that are keeping us from being approved and so we are looking for some direction. First my income, I am a Rn working through an agency therefore, a large portion of my weekly pay in non taxed. The first lender could not verify my income because my w2 is less then my take home pay. We went with another mortgage broker and they were able to verify my income. Then as we were going through the process, our CAIVRS # was declined.”
“We cleared it up with FHA and they gave us the green light to proceed with a mortgage, however, our lender is still declining us . What happened was we had a foreclosure that started in 2010 through Bank of America. It was not officially foreclosed and put on public record until 2014. We requested a CAIVRS review through FHA and they cleared our CAIVRS # based on the fact that bank of america took an extremely long time to foreclose the property. Our lender is saying that although our CAIVRS # is clear that does not mean we are qualified to apply for a mortgage because of the public record date. We have been reading the FHA blogs and researching as much as possible. Why won’t our lender approve us if FHA is saying that on their end we are eligible to apply for a loan?”
For those who don’t know what CAIVRS is, let’s get the definition for it as displayed on the FHA official site:
“CAIVRS stands for Credit Alert Verification Reporting System and it is a system maintained by the federal government that lists persons who have defaulted or had a loan foreclosed within the last three years on a debt owed to the Federal government or are currently delinquent on a debt owed to the Federal government. Examples of Federal debts include previous FHA or Veterans Administration home loans, Federal student loans, Small Business Administration loans and similar types of debts.”
The CAIVRS reference in this reader question is important to understand because, as the FHA official site mentions, a potential FHA loan applicant is, “not eligible for an FHA mortgage if he is presently delinquent on any type of Federal debt, unless the delinquent debt is paid in full or otherwise brought current under a repayment plan approved by the Federal agency that is the holder of the debt.”
The reader’s basic question can be paraphrased as, “Why won’t my lender give me an FHA loan even though the FHA says I can qualify for one in spite of my CAIVRS data?” The answer is that lender standards at that financial institution may not permit the transaction even though the FHA says technically it could move forward.
The reader’s basic option here is to search for a lender who is willing to work with the applicant’s circumstances. FHA minimum standards and lender standards might not always be the same–the lender may have additional requirements, or more strict requirements than the basic FHA minimums in this area.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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