The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited HUD’s Credit Alert Verification Reporting System (CAIVRS) to determine whether the default and claims data in CAIVRS agreed with the data in the Federal Housing Administration’s (FHA) default and claims systems. We found that HUD’s CAIVRS did not contain information on all borrowers’ default, foreclosure, and claim activity. It would incorrectly return accept codes for more than 260,000 borrowers who had been in default, foreclosure, or claim within the past 3 years. In addition, CAIVRS did not contain information for FHA borrowers with claims older than 3 years. Therefore, HUD did not provide other Federal agencies with sufficient information on FHA borrowers with delinquent Federal debt to meet the requirements of the Debt Collection Improvement Act, which bars delinquent Federal debtors from obtaining additional Federal loans or loan guarantees until such delinquency is resolved. We recommend that HUD document the selection rules used for feeding data to CAIVRS, update the rules to provide for complete reporting of all ineligible borrowers, and develop system error checks to identify potential issues. We also recommend that HUD report FHA borrowers with delinquent Federal debt beyond the 3-year claim period or obtain an exemption from the Secretary of the Treasury to exempt these loans after 3 years.
Recommendations
Housing
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Status2014-KC-0002-001-BOpenClosed$9,501,619.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
PriorityPriorityWe believe these open recommendations, if implemented, will have the greatest impact on helping HUD achieve its mission to create strong, sustainable, inclusive communities and quality affordable homes for all.
Update selection rules for CAIVRS to provide for complete reporting of all ineligible borrowers to put $9.5 million to better use.
Status
In 2020, HUD suspended reporting delinquencies and defaults to the Credit Alert Verification Reporting System (CAIVRS) because these debts are owed to the lender and are not delinquent federal debt. A debt is not delinquent until payment is overdue to HUD for a deficiency judgment against the borrower in connection with an FHA claim. Rather than add the missing borrowers to CAIVRS, the Office of Single Family Housing directed HUD’s National Servicing Center to cease including borrower creditworthiness information in CAIVRS and to solely use the system to report deficiency judgments until the delinquent debt is resolved. HUD provided the Interface Control Document showing what data is sent to CAIVRS related to deficiency judgments. As of July 2025, OIG is seeking clarification on HUD's implementation and closure of the recommendation because it is not clear whether all deficiency judgments are now being reported in CAIVRS until resolved. HUD OIG disagrees with the closure of this recommendation until HUD provides evidence that the system updates have been implemented and that they provide complete reporting of all ineligible borrowers.
Analysis
To fully address this recommendation, HUD must provide evidence that all deficiency judgments are reported in CAIVRS until resolved.
Implementation of this recommendation should result in HUD putting $9.5 million to better use.