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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.

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

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

  • J Pa says:

    Hi Scott, I am a little confused. My family had a bankruptcy in Aug 2016. I went to apply for a VA loan and was denied due to a Cavrs claim dated Sept 2016. Does having an FHA home foreclosure in Sept 2017 after a ch.7 bankruptcy in Aug 2016 increase the 2 year waiting period for a VA loan since both are government backed loans?

    • Scott Schang says:

      Yes, this can be confusing. The “waiting” periods are different depending on what type of financing you are applying for. When using a VA loan, the Bankruptcy and the Foreclosure have separate waiting periods. Only conventional financing allows you to ignore the foreclosure date and use the bankruptcy waiting period.

      For VA, it’s a 2 year wait from the bankruptcy, and a separate 2 year wait following a foreclosure or deed in lieu of foreclosure. CAIVRS is not preventing you from qualifying for a VA loan, your 2 year waiting period is not up until September 2019.

      If you would like, I can introduce you to a loan officer that has experience with these guidelines and can help prepare you for this journey. You’re obviously not speaking with a lender that has experience with these guidelines now. If you’re interested, shoot me an email to scott@findmywayhome.com and let me know what State you’re buying in?

      Hope this helps?

  • Anonymous says:

    where do I get a trustee deed?

    • Scott Schang says:

      You should be able to get a copy from the County Recorders office. It should be available online in most States. If you’re in California, I know most property records are online.

      I can introduce you to a loan officer that has access to these records in all 50 States. If you would like an introduction, shoot me an email to scott@findmywayhome.com.

      Hope this helps?

  • Carlos says:

    I had a USDA foreclosure in Feb 2017. I have been told a couple different thing about waiting periods. What is the actual waiting period and Is there a way around the waiting periods like getting a conventional home-loan instead ?

    • Scott Schang says:

      Hi Carlos, if the foreclosure was included in a bankruptcy, you could use a Conventional loan in 4 years from the discharge of the Bankruptcy, and ignore the foreclosure date.

      If there was no bankruptcy the waiting periods are as follows: USDA/FHA – 3 years from foreclosure date | Conventional – 7 years from foreclosure date.

      There are portfolio loans that will allow you to buy 1 day out of foreclosure. These loans typically will require 20% down payment, and you can expect higher rates and fees.

      If you have money for a down payment and would like to explore this option, shoot me an email to scott@findmywayhome.com and tell me what State you’re trying to buy in. I can introduce you to someone that has experience with these guidelines.

      Hope this helps?

  • Gerald says:

    We discharged the Chapter 7 bankruptcy (no foreclosure) in June 2018. Which is 7 months ago, are there any waivers or circumstances that the 2-year waiting period could be minimized?

    • Scott Schang says:

      Hi Gerald, thank you for the question. What you are asking about is called an “extenuating circumstances exception” and it is very difficult to qualify for.

      Your shortest waiting period is to use a FHA loan, that’s only a 2 year wait from the discharge of the bankruptcy. Conventional financing is a 4 year waiting period.

      If you qualify for the extenuating circumstances exception, that could reduce the waiting period on FHA from 2 years to 1 year, and Conventional from 4 years to 2 years.

      Now, here’s kind of the catch. By the time you try to qualify for the exception for Conventional financing, you’re already eligible for FHA without jumping through any additional hoops.

      The challenge is that the definition of an extenuating circumstance is the death or permanent disability of a primary wage earner that caused a significant drop in household income, leading to the hardship.

      The other option is a portfolio loan. With 15% to 20% down payment, you could use a portfolio loan to buy now, then refinance as soon as your waiting period is met.

      The down payment and interest rates tend to be higher than FHA or Conventional financing, but the advantages of buying now as opposed to waiting are many fold and it almost always makes sense to consider this option if you have the means.

      Hope this helps?

  • Michele says:

    Where would I obtain a copy of my transfer deed?

    • Scott Schang says:

      Hi Michele, I saw your email, I’ll answer there as well. A copy of the transfer deed should be at the County Recorders Office in the County where the transfer took place.

  • Qiana says:

    Hello Scott I am about 2 weeks away from closing on a property and I was made aware of a CAIVRS alert yesterday! I was divorced in 2015 and the foreclosure happened in 2017. I quit claim deeded the property to my ex husband in 2016. Is it possible they will suppress it? I filed Chapter 7 and it was discharged in 2012.

    • Scott Schang says:

      Hi Qiana, if CAIVRS came up, that means that your lender is trying to qualify you for a FHA loan. I sure hope your lender knows their guidelines because this could get pretty hairy. It’s going to be a significant challenge. There’s no way around it.

      Technically, if you were on the mortgage when it foreclosed in 2017, CAIVRS will not be waived until 3 years from the foreclosure date. You’re going to have to talk to someone at CAIVRS, and hopefully your divorce decree specifically spells out the fact that the mortgage, and home are 100% your ex husband’s responsibility.

      An inexperienced lender’s head will explode if they start down this rabbit hole, so copy this and send it to them and see what they say. Your other option is to switch the loan to Conventional, which would allow you to buy 4 years from the discharge of the Bankruptcy, and ignore the foreclosure in 2017.

      If you need additional help, or an introduction to a lender that has extensive experience with these guidelines, please email me at scott@findmywayhome.com, and let me know what State you’re buying in.

      The fact that CAIVRS “popped up” yesterday leads me to believe that your lender is in way over their head and will not know how to get you out of this.

      Hope this helps?

  • Scott I want to thank you for your insight, gratitude, and last but not least your help. I emailed Scott last week on May 9, 2018 after coming across his website. Set to close May 31, 2018 I find out I’m on this CAIVRS LIST. I had previously foreclosured on a property in 2012. Not know what CAIVRS was or what it stood for I went into research mood. After looking and reviewing Scotts findmywayhome website, I had a better understanding of CAIVRS. Long story short I cleared CAIVRS this morning May 15, 2018 thanks to Scott. Answers@hud.gov is real, email them your documents providing dates and they will help the suppression of your CAIVRS if after 3 years of title coming out of your name. Thanks again Scott I can finally breathe!!!!!!!!

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