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CAIVRS measures waiting period from foreclosure, short sale, deed in lieu

FHA Waives CAIVRS Waiting Period After Foreclosure, Short Sale or Deed in Lieu?

CAIVRS is an automated monitoring system that tracks defaults on Government debt.

If you have  been a victim of foreclosure, short sale, or deed in lieu of foreclosure on a FHA or USDA mortgage, you will have a CAIVRS alert associated with your social security number.

Default on student loan debt will also trigger a CAIVRS alert, and can prevent you from using a FHA or USD Government insured mortgage.

  • Waiting Periods after Losing Your Home
  • How CAIVRS Can Stop You From Buying a Home
  • Did HUD waive the CAIVRS Waiting Period?
  • Working with a Mortgage Expert
  • Setting Yourself up for Success

Waiting Periods After Losing Your Home

Since 2008, there have ben many families across the Country that fell victim to bankruptcy, foreclosure, short sale or a deed in lieu of foreclosure as a result of the real estate collapse.

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The path forward, if you experienced one of these financial set backs, is typically just a waiting period.  The waiting period to be eligible to buy again will depend on the type of financing you are using.

Conventional Waiting Period

You can buy using conventional financing in:

  • 4 Years after the discharge of a Chapter 7 Bankruptcy
  • 2 Years after the discharge of a Chapter 13 Bankruptcy
  • 4 Years after a Short Sale or Deed in Lieu of Foreclosure*
  • 7 Years after a Foreclosure*

* If your mortgage was included in bankruptcy, and a foreclosure, short sale, or deed in lieu occurs after the discharge, an underwriter may use the bankruptcy waiting period and ignore the subsequent default of the mortgage.

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VA Waiting Period

You can buy using VA financing in:

  • 2 Years after the discharge of a Chapter 7 Bankruptcy.
  • 1 Year after Filing a Chapter 13 Bankruptcy if you have satisfactorily made at least 12 months worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit.
  • 2 Years after a foreclosure or deed in lieu of foreclosure.
  • Short Sale – VA does not recognize a short sale as a derogatory event.  If you are able to credit qualify for a VA loan, a short sale would not prevent you from being eligible for VA financing. Updated 4/2016

USDA Waiting Period

You can buy using USDA financing in:

  • 3 Years after the discharge of a Chapter 7  or 13 Bankruptcy
  • 3 Years after a Short Sale or Deed in Lieu of Foreclosure*

* If your mortgage was included in bankruptcy, and a foreclosure, short sale, or deed in lieu occurs after the discharge, an underwriter may use the bankruptcy waiting period and ignore the subsequent default of the mortgage.

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FHA Waiting Period

You can buy using FHA financing in:

  • 2 Years after the discharge of a Chapter 7 or 13 Bankruptcy.
  • 1 Year after the discharge of a Chapter 13 Bankruptcy (manual underwriting only).
  • 3 Years after a foreclosure, short sale or deed in lieu of foreclosure.

How CAIVRS Can Stop You From Buying a Home

If your foreclosure, short sale, or deed in lieu happened with a FHA or USDA mortgage, a CAIVRS alert is in effect for 3 years from the date that the mortgage insurance claim is paid to the original lender.

While all other waiting periods are measured from the date that the deed of trust is transferred out of your name, the waiting period for a new Government mortgage begins from the date the mortgage insurance claim is paid.

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CAIVRS claims are causing considerable challenges for home buyers that were shocked to find out that the mortgage insurance claim was not issued until months, or even years after the home was transferred out of your name.

This biggest challenge with having a CAIVRS land mine explode under your feet is that inexperienced loan officers do not even know to look for this surprise, until it’s often too late.

If not caught early, the CAIVRS alert will not be caught until you are well into the process to buy your new home.  More often than not, this challenge rears it’s ugly head weeks before the closing date.

Did HUD waive the CAIVRS Waiting Period?

I am now seeing a pattern of HUD volunteering to suppress the CAIVRS alert if you provide them with a scanned copy of the transfer deed removing your name from title.

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I have seen this done several times in the past 30 days, and it was undeniably confirmed when I got this email from a client:

Please email a copy of the Trustee’s Deed Upon Sale to answers@hud.gov. If the sale occurred over 3 years ago we can process an early CAIVRS suppression.

You may also speak directly to a customer service representative by calling 1-800-CALL-FHA (1-800-225-5342) from 8am to 8pm EST or visit our online knowledge base at www.hud.gov/answers, 24 hours/7 days a week.

This is not an isolated incident.  Because we specialize in qualifying for a mortgage after a financial hardship, I see patterns and emerging trends.

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I’ve taken at least four phone calls and emails in the last few weeks about CAIVRS suppressing the alert so that you can go by the foreclosure, short sale, or deed in lieu date, and not when the mortgage insurance claim was paid.

I have also confirmed that mortgage experts from our Expert Network have confirmed that they are seeing these same results.

Working with a Mortgage Expert

Choosing the best mortgage based on your qualifications requires that you work with a professional loan officer that has experience with all of the options that are available to you.

All mortgage companies are NOT created equal.  Big box lenders that advertise on TV, radio and the internet, often only target a very narrow qualifying criteria.

These popular lenders spend millions of dollars on marketing and advertising, only to dump you into a call center and put you in the hands of an inexperienced customer service telemarketer.

Big box lenders try to convince unsuspecting consumers that it’s the lender that matters, and never mention the fact that your loan officer is the gateway to you getting the best mortgage.

You should avoid these types of lenders at all costs if possible.  They do not offer lower rates or better service, but they do have more money to convince you that they do.

Set Yourself Up for Success

The absolute first step to buying a home is to get your financing ducks in a row before you start looking for home.  This means working with a mortgage professional.

Once you find an expert loan officer that you trust, ask them for an introduction to a local real estate agent that they trust.  Even if the loan officer is not from the community that you’re buying in, they will still be able find an agent that rises to the level of professionalism you deserve.

Not sure where to find a professional loan officer that you can trust?  You’re in the right place!

If you have any questions or comments about this topic, feel free to leave a comment below, or you can shoot me an email at questions@findmywayhome.com.

Now sure how to identify a professional loan officer?  Watch these expert interviews I’ve done with professional loan officer friends of mine.

I firmly believe that once you hear how a professional loan officer communicates, it will help you to avoid silly mistakes and errors that are common with inexperienced or uneducated loan officers.

About Your Expert

Scott Schang

A 20 year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues, and making sense of complicated real estate and mortgage topics on this website since 2007

Leave a Question or Comment About this Topic

  • Andres Jaramillo says:

    Hi Scott, Need help. I was told I qualified for a FHA Loan in Charlotte. I moved my family from South Florida to close on the home August 22, 2019. We are 5 days away and the CAIVRS report has pulled up a SBA loan that i defaulted on December 2016. I filed for bankruptcy officially 2016 however the loan officer is stating that FHA under-righter will not allow a FHA anymore. Too short notice for Arm loan that hey are offering to gather 45k dollars or the private loan with 10% down and a 6.25 rate. Is there anything that can be done?

    • Scott Schang says:

      Hi Andres, I think you’re stuck on the SBA loan, and I’m not an attorney, but I would check to see if an SBA loan can be discharged in bankruptcy, I’m thinking it might not. Like student loans.

      The 10% loan at 6.25% is not a bad solution. You only need to be 4 years from the BK discharge to refinance out of that loan into a Conventional loan. Yes, you’ll pay a little more, but only for a short period of time. The benefits of homeownership far outweigh that very small cost.

      I do have a few friends in NC if you want a second opinion. If you would like an introduction, shoot me an email to scott@findmywayhome.com and I can make that connection.

      Hope this helps?

    • Shameca says:

      I have a friend going thru the exact same thing and suppose to close soon. What was the resolution method you used to still buy your home?

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