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Document

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.

 

Recommendation Status Date Issued Summary
2014-KC-0002-001-A Open July 02, 2014 Document the selection rules used for feeding data to CAIVRS to explain in detail the flow of information from HUD’s systems.
2014-KC-0002-001-B Open July 02, 2014

Update selection rules for CAIVRS to provide for complete reporting of all ineligible borrowers to put $9.5 million to better use.


Status

As of January 2024, the Office of Single Family Housing stated that 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 a payment is past due to HUD for a deficiency judgment against the borrower in connection with an FHA claim. Rather than add the missing borrowers to CAIVRS, HUD determined it would remove default and claim data from the system and use it to exclusively identify borrowers with delinquent Federal debt. This will resolve the issue of incomplete reporting of delinquent federal debts greater than 3 years old. The final action target date is June 28, 2024.


Analysis

To fully address this recommendation, HUD must provide evidence that it removed default and claim data from CAIVRS.

Implementation of this recommendation should result in HUD putting $9.5 million to better use.

2014-KC-0002-001-C Open July 02, 2014 Develop and implement system error checks to identify potential reporting issues.
2014-KC-0002-002-A Open July 02, 2014 Update CAIVRS’ selection rules to report delinquent Federal debt beyond the 3-year claim period or obtain an exemption from the Secretary of the Treasury to exempt FHA loans after 3 years.