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Student Loans Are No Longer Reported As Delinquent (Thanks To New Legislation)

Certified Mortgage Advisor
NMLS 1701021
July 22, 2022

Changes that can help you get a house

This new change will help you get approved for a mortgage if you have any delinquent, federal student loans. So I ran across this post on Reddit which I always tend to learn a ton on, and this person said federal student loans are no longer being reported to CAIVRS.

What is CAIVRS?

If you're not familiar with CAIVRS. Basically any delinquent, federal debt is put onto a warning list. Basically, you can't get a new government loan like FHA, VA, or USDA. If you're on the CAIVRS list. So any federal delinquent student loan debt, it's put on that list.

In CAIVRS, no loan

If you had to apply for an FHA loan and they see it, you won't be able to qualify for that loan unless you're taken out of CAIVRS Getting off of the CAIVRS list includes either paying off the loan or getting on a payment plan to bring it back.

Reddit story time

So here's the Reddit post. This person says, here's my story: On July 15th, I settle in my new house, and the following week, my wife and I are welcoming up our first child in mid-June. My lender pulls out the CAIVRS report and sees that I have a delinquent federal student loan. My mortgage is dead in the water at that point, unless I can find a way to clear my name from CAIVRS. So they go on to talk about how they called did a bunch of calling to figure out how to get out of this.


So instead of having to pay it off, they found out there was actually a change that was passed that actually clears anyone who has delinquent student loan debt from the CAIVRS list. And as I was reading through this, I was like, I haven't heard about this and no one else is really talking about it, and so I dug through a little bit.

Tweet from the Secretary of Education

Here's a tweet from the Secretary of Education talking about this extension that they have on student loan repayment will also include a fresh start, eliminating the impact of delinquency and default for all borrowers.

Clean slate!

So anybody who is in this situation, was on the CAIVRS report because they had delinquent or defaulted student loans. That's now wiped clean. And then when payments resume, the hope is that if those people can make those payments, they will be off of CAIVRS obviously. If they don't make payments in the future, then they will be put back on the CAIVRS system.

But this takes a lot of people out of having to pay either the full amount or have a settlement or consolidation or a payment plan to get their loans at default. So now you'll be able to purchase a home with a government loan, like FHA, VA, or USDA without needing to get off of the CAIVRS list because you're automatically off.

Department of Education website

According to the Department of Education's website, they explain that this includes allowing all borrowers with paused loans to receive. A fresh start on repayment by eliminating the impact of delinquency and default and allowing them to reenter repayment in good standing. This is amazing because I did not know that this happened and this was on April 6th and nobody here is really talking about it. Other than the extended pause, this little bit got slipped in under the radar a little bit.

The repayment plan or paying the amount off in full

Again, this walks you through CAIVRS a little bit, but basically, to get out of delinquency, you're either going into a repayment plan or paying the amount off in full. This change is now going to allow you to qualify for a government loan like FHA, VA, or USDA with defaulted federal student loans. You have always been able to get a conventional loan with defaulted, federal student loans. But government loans pull the CAIVRS report. So this is gonna be super helpful.

Email me → kyle@winthehouseyoulove.com
Kyle Andrew Seagraves is Federal Mortgage Loan Originator (NMLS 1701021) licensed in all 50 states with the Dan Frio Team at Allied First Bank (NMLS 203463), an Equal Housing Lender. Separately, Kyle owns Win The House You Love LLC, an education company. Win The House You Love LLC is not a lender, does not issue loan qualifications, and does not extend credit of any kind. This website is only for educational usage. All calculations should be verified independently. This website is not an offer to lend and should not directly be used to make decisions on home offers, purchasing decisions, nor loan selections. Not guaranteed to provide accurate results, imply lending terms, qualification amounts, nor real estate advice. Seek counsel from a licensed real estate agent, loan originator, financial planner, accountant, and/or attorney for real estate, legal, and/or financial advice.

Allied First Bank is not affiliated with the VA, FHA or any other government agency. This site has not been approved by any government agency.
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