My student loan is in default, in a rehabilitation program and is being reported in caivrs!
Source:
FHA Loan Origination Guide page 56
Delinquent Federal Debts. If the borrower, as revealed by public records, credit information, or HUD’s Credit Alert Interactive Voice Response System (CAIVRS), is presently delinquent on any Federal debt (e.g., VA-guaranteed mortgage, Title I loan, Federal student loan, Small Business Administration loan, delinquent Federal taxes) or has a lien, including taxes, placed against his or her property for a debt owed to the U.S., the borrower is not eligible until the delinquent account is brought current, paid, otherwise satisfied, or a satisfactory repayment plan is made between the borrower and the Federal agency owed and is verified in writing. Tax liens may remain unpaid provided the lien holder subordinates the tax lien to the FHA-insured mortgage. If any regular payments are to be made, they must be included in the qualifying ratios.
I had my loan officer ask the underwriter to see if a defaulted student loan, listed in caivrs which was currently in a rehabilitation program would qualify as a SATISFACTIRY REPAYMENT PLAN and they agree that IT WILL!
WHAT DOES THAT MEAN?
That means I can have a defaulted student loan being reported to caivrs and NOT have to do a consolidation to get an FHA mortgage!!!!!!
I will keep this thread updated as we go through the process. I am waiting for a letter from the IRS showing that we are on a payment plan for back taxes and for new secured cards to post to,the credit bureau. Then we will submit everything to Get our pre-qualification. Wish me luck!
Here is additional information obtained directly from FHA;
Thank you for contacting the FHA Resource Center. A response to your inquiry is provided below. If the information does not fully address your question, please forward this email (do not reply) to answers@hud.gov, and provide additional information so that we may better serve you. You may also speak directly to a customer service representative by calling 1-800-CALL-FHA (1-800-225-5342) or visit our online knowledge base at www.hud.gov/answers, 24 hours/7 days a week.
Your question was regarding Student loan - CAIVRS repayment plan .
FHA does not require a clear CAIVRS in regards to delinquent student loan debt. You need to make sure your borrower meets the non tax delinquent federal debt guidelines in the 4000. As far as a "clear" CAIVRS goes, FHA cannot alter or delete CAIVRS information reported from other Federal agencies. You must contact that agency directly.
Sincerely,
FHA Customer Service Team
Even more information directly from FHA! IF your rehabilitation payment is not a fully amortized payment the loan officer will have to use 1% of your balance for debt to income ratio purposes. Since there is no payment listed on my credit report and my rehab payment is only $5 then they will use 1% of the balance to calculate my student loan payment for debt to income ratios.
Thank you for contacting the FHA Resource Center. A response to your inquiry is provided below. If the information does not fully address your question, please forward this email (do not reply) to answers@hud.gov, and provide additional information so that we may better serve you. You may also speak directly to a customer service representative by calling 1-800-CALL-FHA (1-800-225-5342) or visit our online knowledge base at www.hud.gov/answers, 24 hours/7 days a week.
Your question was regarding Student loan CAIVRS .
Please see below the following excerpt from the HB 4000.1 regarding student loans.
4000.1 II. A. 4. iv. (H) Student Loans (TOTAL)
(1) Definition
Student Loan refers to liabilities incurred for educational purposes.
(2) Standard
The Mortgagee must include all Student Loans in the Borrower’s liabilities, regardless of the payment type or status of payments.
(3) Required Documentation
If the payment used for the monthly obligation is:
less than 1 percent of the outstanding balance reported on the Borrower’s credit report; and
less than the monthly payment reported on the Borrower’s credit report;
the Mortgagee must obtain written documentation of the actual monthly payment, the payment status, and evidence of the outstanding balance and terms from the creditor.
(4) Calculation of Monthly Obligation
Regardless of the payment status, the Mortgagee must use either:
greater of:
1 percent of the outstanding balance on the loan; or
the monthly payment reported on the Borrower’s credit report; or
the actual documented payment, provided the payment will fully amortize the loan over its term.
If the repayment plan will fully amortize the loan over its term, then yes, it can be used.
DE underwriters are expected to exercise due diligence in their review of the case file and apply basic underwriting criteria to their specific situation and make the appropriate determination.
Sincerely,
FHA Customer Service Team
