www.hudclips.org 


U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410-8000

August 1, 1988
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
Mortgagee Letter 88-28
TO:  ALL APPROVED MORTGAGEES
SUBJECT:  Credit Alert Interactive Voice Response (CAIVR) System
            Additional Processing Instructions
 
        The purpose of this Mortgagee Letter is to provide you with
updated information about the CAIVR system, that we implemented by
Mortgagee Letter 87-17, dated June 9, 1987.
 
        As You know, the CAIVR system has been in operation since
August 1, 1987.  Based on the number of calls we have received from
lenders regarding defaults and/or claims on borrowers seeking
FHA-insured mortgages, we believe the system has been successful.
 
        We are completing our first overall review of cases since
implementation of the CAIVR system and it appears that some lenders
are not complying with the requirement to write the Credit Alert
authorization codes on the mortgage credit worksheet.  Some cases did
not have authorization codes for the borrower and co-borrower, some
cases had incorrect authorization codes, and some cases were approved
where the borrower had defaults and/or claims but no documentation
or information was submitted to show extenuating circumstances and
justification for approving the loan.
 
        You are reminded that all cases approved for mortgage
insurance (except streamline refinance transactions) must include the
Credit Alert authorization codes for the borrower and co-borrower.
Any case involving a borrower with a prior default or claim must
include an explanation of the extenuating circumstances that support
loan approval.  The information must be written on the mortgage
credit worksheet.
 
        Cases insured where the borrowers have prior defaults or
claims without an explanation of extenuating circumstances violate
our underwriting requirements and could result in a requirement that
the originating mortgagee indemnify HUD against any loss occasioned
by the mortgagor's default and HUD's payment on an insurance claim.
 
        We are developing new enhancements to the Computerized Home
Underwriting Management System (CHUMS) to enable the Field Offices to
verify the CAIVR authorization codes before CHUMS issues the Mortgage
Insurance Certification (MIC).  MICs will not be issued on cases with
CAIVR codes that are not verified until the Field Office reviews the
cases and determines why the loans were closed.
 
        These CHUMS enhancements are scheduled for implementation by
September 30, 1988.  Until these enhancements are implemented, cases
with incorrect Credit Alert authorization codes are being forwarded
to our Mortgagee Monitoring Division to assure compliance.
 
        If you have any questions regarding this letter, please
contact:
 
                Howard D. Mayfield
                Department of Housing and Urban Development
                Office of Insured Single Family Housing
                Single Family Development Division, Room 9270
                451 Seventh Street, SW
                Washington, DC  20410-8000
                Telephone:  (202)  755-6723
                        Sincerely yours,
                        Thomas T. Demery
                        Assistant Secretary