After doing a lot of research for this myself and I wanted to pass along what I discovered. First off, FHA/HUD will not remove a person from the CAIVRS list before the 3 year 1 day waiting period unless the person was put on their incorrectly or they qualify for one of three exceptions (bankruptcy over 2 years ago, divorce where mortgage was assumed by spouse before short sale, and death of a spouse I believe). In my situation I was trying to do a VA loan at the 2 year mark (which was what I had found was the standard wait time for VA after a short sale) and I ran into the CAIVRS road block. Our lender told us originally that the VA will not guarantee a loan if a customer is on the CAIVRS list and it has to be clear, which as I explained above is not going to happen.
The good news is I did a TON of digging and calling and here is what I found: By calling my local VA regional loan center (St. Paul, MN 1-800-827-0611 option 3) I found that the VA really doesn't follow the 2 year mark anymore. That was an older rule that they followed with the housing market collaspsed. But as they told me, most short sales were done not out of financial hardship but more because people can't get their homes appraised for what they owe. So they told me that as soon as 6 months after a short sale you can get approved if you have good credit.
Now the trick is, what about CAIVRS? Well I was told they follow two specifc exceptions to guaranteeing a loan even if you are on CAIVRS. The first is if you have an established payment plan in place. The second would be if you could prove you do not owe the federal goverment a debt. Below is the link verbiage the VA sent me:
Please open up this link below and go to page 4-36&4-37(34 out of 65 in Microsoft word) and you will see what I was able to locate. http://www.benefits.va.gov/warms/pam26_7.asp
Of course the VA doesn't have any of these written anywhere so you either have to call them and verify or have a lender that has dealt with this before.
Now in my case I took part in the Pre Foreclosure Sale to do my Short Sale and was able to successfully close on my home within a few months. This was key because the Pre Foreclosure Sale Program specifically says that a "mortgagor (myself) that successfully sells their home under this program is relieved of their mortgage obligation." Check out the HUD mortgagee letter 2008-43 (page 15, section P, first sentence) to verify what I submitted to my loan officer. Just do a google search and you'll find it.
So with that along with the Approval to participate in the Pre Foreclosure Program letter I received, I was able to prove to my lender that I no longer owed the federal government a debt which is what the VA says they need in case they ever audit the lender's files. That's big too because the lender submits a bunch of loan approvals and it is only if they audit them that this would come up and then the Lender would need documentation of why they approved this loan. Because Lenders are so worried about mortgages not being insured/guaranteed, they will overscutinize a loan.
To take this another step further, I even called HUD myself (which thankfully I found a good number) at the HUD National Servicing Center (1-877-622-8525, option 1) and was able to give them my name and FHA case # and they flat out told me that HUD nor my bank would come after me for any deficiencies. The people I spoke to basically say they mainly go after those who walked away from their property or had multiple foreclosures in the past (go to http://www.hud.gov and then do a search for judgements and you'll find stuff on this). I also emailed FhaSfclaims@hud.gov and asked them if I owe a debt and their response was " No, there should be no deficiency that HUD would require you to repay for a claim paid on a single family mortgage preforeclosure sale."
I hope this helps those of you out there that are in my type of situation and run into this problem. CAIVRS is going to become more and more popular since those of us with a short sale are now looking at buying again and about half of the lenders I called even knew it existed. But keep in mind, this isn't on your Credit Report and CAIVRS is only ran during underwriting so if you have a short sale I would advise your lender to run that CAIVRS report right away because it will save you some time and headaches! My lender knew about this and was able to manually approve our loan and so we are moving into our new house in September! Good luck everyone!
My name is Jimmy Vercellino and I would be honored to serve you. I am a United States Marine Corps Veteran and now specialize in serving Active Duty Military and Veterans across the nation.
It's funny that you ask this question because I literally just wrote a blog on this the other day.
Feel free to check it out at
Thank you and may God bless you for your service to our great country!