FHA LOAN Clear CAIVRS question, defaulted SL Debt

Anonymous · ‎08-18-2019

Hi! Long time lurker here, I’ve read as much as I could but really need some opinions.

We are currently under contract, cleared CAIVRS on 7/31/19 by our LO, boyfriend just received a garnishment in mail 8/16/19 from old SL debt (federal). 19k, we cannot pay this in full. I emailed the letter to my LO, and haven’t heard back.

Question is: our CAIVRS is clear, garnishment will start 8/23/19, we are supposed to close on 11/14/19. Is this going to kill the home loan?

We have worked tirelessly paying off debt, and raising our credit scores, and long story short a few months ago he called SL and tried to setup a repayment agreement and apply for hardship, (he can’t consolidate as he did that back in 2003, and rehabbed once 10 years ago) it didn’t work out so now the garnishment, this doesn’t affect our DTI much it’s more of the fact that they are federally backed student loans and we were getting an FHA loan.

Anyone know anything about this? I have no clue why his CAIVRS is clear, but will UW deny us anyway?

Thank you so much for any help you can offer, stress level is through the roof.

pgtackle2003 · ‎08-19-2019

I do also find it incredible you cleared it this far into a mortgage with a SL default oif 19k on the credit report. I am unsure how any UW would clear this for closing with a garnishment looming and no chance of rehab since it's been done before on this loan.

I would be getting you LO on the phone ASAP and working this out. FHA guidelines say you shouldn't have any lates in the last 12 months. If a SL is in default then that would mean it's been late recently and for a while. If I were you I'd prepare for the worst that they can't close this loan.

Sorry this happened at such a bad time

Anonymous · ‎08-19-2019

Thank you so much for your reply, honestly I am preparing myself. This is sort of what I thought, after all of my research. I will definitely be in touch with my LO today.

Thank you again for your time!

VALoanMaster · ‎08-19-2019

@Anonymous wrote:
Hi! Long time lurker here, I’ve read as much as I could but really need some opinions.

We are currently under contract, cleared CAIVRS on 7/31/19 by our LO, boyfriend just received a garnishment in mail 8/16/19 from old SL debt (federal). 19k, we cannot pay this in full. I emailed the letter to my LO, and haven’t heard back.

Question is: our CAIVRS is clear, garnishment will start 8/23/19, we are supposed to close on 11/14/19. Is this going to kill the home loan?

We have worked tirelessly paying off debt, and raising our credit scores, and long story short a few months ago he called SL and tried to setup a repayment agreement and apply for hardship, (he can’t consolidate as he did that back in 2003, and rehabbed once 10 years ago) it didn’t work out so now the garnishment, this doesn’t affect our DTI much it’s more of the fact that they are federally backed student loans and we were getting an FHA loan.

Anyone know anything about this? I have no clue why his CAIVRS is clear, but will UW deny us anyway?

Thank you so much for any help you can offer, stress level is through the roof.

When was the last time your boyfriend made a payment on his student loans?

Who sent you the garnishment letter?

Depending on your answers, the fact that the student loans are going to be garnished doesn't mean that you're going to get denied for a mortgage as long as you still qualify with the payment from the garnishment counted in your DTI.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.

Anonymous · ‎08-19-2019

Hi! He last made a payment a few years back, sounds like he had a slew of financial difficulty some years ago, which has all been remedied besides being able to come to a payment agreement with FH Cann & Associates - (collections agency for US Govt who sent the garnishment to his employer).

Our DTI is great, no issues there.

I know when closing gets closer they will ask for more recent paystubs and see the garnishment, plus I just want to be upfront and honest because life is always easier that way.

Anonymous · ‎08-19-2019

Also, it's not listed as defaulted on his Credit Report - it says closed and transfered (14 months ago).

VALoanMaster · ‎08-19-2019

@Anonymous wrote:
I know when closing gets closer they will ask for more recent paystubs and see the garnishment, plus I just want to be upfront and honest because life is always easier that way.

Have you guys tried calling the Department Of Education to resolve it?
As long as the payment doesn't push your DTI to a point where you no longer qualify, you should be fine.
One potential issue would be whether or not you have 3 monthly payments made on the student loans by the time you hit your close date.
Make sure that you ask the LO if the u/w is going to require 3 monthly payments on that debt.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.

Anonymous · ‎08-19-2019

You were absolutely correct, our LO talked with the UW. They will still close the mortgage, they want a copy of the garnishment in full, and will calculate into DTI. The key factor is that he cleared CAIVRS, I can finally sleep tonight. He will have made three monthly payments before our loan closes, although they didn't say the UW would require it. Thank you all for your help, I really appreiate it! What a rollercoaster ride.