www.hudclips.org U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D. C. 20410-8000 February 24, 1988 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER Mortgagee Letter 88-4 TO: ALL APPROVED MORTGAGEES SUBJECT: Revised Credit Alert Interactive Voice Response System (CAIVRS) -- Combining Title I and Title II Records Additional Processing Instructions This letter replaces Mortgagee Letter 87-17 and sets forth the revised procedure, effective March 1, 1988, for using HUD's Credit Alert Interactive Voice Response System (CAIVRS). CAIVRS will now include information about claims paid by HUD on loans (such as, for home improvement or to buy manufactured homes) insured under Title I of the National Housing Act. This letter also provides additional instructions on processing and underwriting applications where the default or claim was due to extenuating circumstances or occurred after the assumption of the mortgage by a buyer. CAIVRS replaced the FHA Credit Alert booklets provided for in conjunction with Mortgagee Letter 87-3. Effective March 1, 1988, insurance claim information on Title I borrowers will be included in CAIVRS along with the default and claim information on Title II borrowers that it now contains. While Title I lenders will have access to CAIVRS, they will receive separate underwriting instructions for Title I loans. Using CAIVRS, FHA lenders must call a special telephone number and enter the social security numbers of applicants by touch-tone telephone. An automated system will answer the call, check the social security numbers of the applicants against a file of numbers containing defaults and claims, and respond to the caller accordingly. A. CAIVRS PROCEDURE As indicated above, the interactive voice response function provides lenders with the ability to use touch-tone telephones to access HUD's Claim/Default File for instant voice response of client credit information. The telephone number for CAIVRS is 301-588-2233, and its hours of operation are Monday through Saturday from 9:00 a.m. to 9:00 p.m., Eastern Time. Please note that this is not a toll-free number and that a touch-tone telephone must be used. CAIVRS operates in the following manner. (1) The incoming call will be answered and the System will recite this salutation message: "You have reached the HUD Credit Alert System; please enter your 10-digit mortgagee number." This 10-digit number may be found on the first line of the mailing label on this Mortgagee Letter. (2) The mortgagee must then enter the 10-digit number. The System will then validate the mortgagee number. If the number entered is determined to be invalid, the following message will be recited: "This is not a valid number. Please re-enter your 10-digit mortgagee number." If, on the second try, the caller does not enter a valid identification number, CAIVRS will recite the message: "This is not a valid number. For further information, please call the Department of Housing and Urban Development on 202-755-6857 if you are a Title I lender, or on 202-755- 0316 if you are a Title II lender." The call will then be terminated. (3) When the mortgagee number has successfully been validated, the System will recite the following message: "Please enter borrower's social security number without dashes." Enter the first social security number. (4) The System will receive the nine digits entered by the mortgagee and ask for verification with the message, "You have entered nnn nn nnnn. If this is correct, enter 'Y'; if it is not correct, enter 'N,'" (where "nnn nn nnnn" is the number that was entered). The System will then make a beeping sound and wait for one digit to be entered. The response must be made after the beep in order to be received. If "N" is entered, the System will permit two additional tries (allowing a total of three tries for entering each social security number). If on the third try the caller has not entered the correct number, the System will issue the message, "Please call the Data Transformation Corporation on 301-587-4580 extension 325 for assistance." (5) The System will then search HUD's records of the claims and defaults for a match on the social security number entered and validated by the mortgagee. If no match occurs, the System will recite the message, "There are no claims or defaults for this borrower," and proceed to step 7. (6) If the social security number is found to be that of a borrower who has had a claim under Title I or II or is in default on an insured loan under Title II, the System will read all case codes to determine which of the following messages to recite: o "THERE IS A CLAIM FOR THIS BORROWER." o "THERE IS A DEFAULT FOR THIS BORROWER." o "THERE ARE CLAIMS AND DEFAULTS FOR THIS BORROWER." o "THERE ARE CLAIMS FOR THIS BORROWER." o "THERE ARE DEFAULTS FOR THIS BORROWER." The System will then recite the Title I and Title II case numbers on which these claims or defaults have occurred, using the following format for messages, as appropriate: o "TITLE I CLAIM nnn nnn nnn." o "FHA CLAIM nnn nnn nnn." o "FHA DEFAULT nnn nnn nnn." The numbers will be spoken slowly to facilitate recording by the caller. (7) The System will then generate a Credit Alert Access Code and will recite the message, "Credit Alert Access Code is . . ." and will recite the code. (This code must be entered on the Mortgage Credit Worksheet as noted below.) (8) The System will now instruct the caller: "Enter additional social security numbers or hang up now." However, remember that the System can check only one social security number at a time. If the System detects a hang-up, the call will be terminated. Otherwise, the process is repeated starting with step 4. However, if more than 15 seconds elapse without the entry of another social security number, the call will be terminated. B. PROCESSING PROCEDURE The information provided by CAIVRS is to be used by mortgagees in a manner completely analogous to that provided by the FHA Credit Alert booklets described in detail in Mortgagee Letter 87-3. Thus, the social security numbers of all applicant mortgagors (including co-mortgagors) must be entered into CAIVRS to see if there is a default or claim against any of them. During the face-to-face interview lenders should be obtaining information from the borrower on any current or prior obligation on FHA insured Title II home mortgages and Title I loans. It would also be appropriate at this time to check the applicant's social security number on CAIVRS if it appears that the applicant might have an adverse credit history with FHA. The results of this check are to be entered in the Remarks Section (Block 19) of the HUD-92900 Worksheet along with the Credit Alert Access Code given in step 7 of the process described above. C. CLARIFICATIONS TO UNDERWRITING INSTRUCTIONS FOR TITLE II LOANS 1. Streamline Refinance Transactions The social security numbers of applicants applying for a streamline refinance (with or without an appraisal) to reduce the interest rate should not be entered into CAIVRS. Just note the Mortgage Credit Worksheet accordingly. 2. Extenuating Circumstances Claims paid as a result of the assignment of a mortgage to HUD are also reported to the CAIVRS. Under HUD's assignment program, assignments are accepted only when the default arises from circumstances beyond the mortgagor's control. Therefore, acceptance by HUD of a previous Mortgage for assignment is evidence of extenuating circumstances. However, HUD's nonacceptance of an assignment is not conclusive evidence that extenuating circumstances were absent, because other factors may have entered into our decision. Applications involving extenuating circumstances can be processed under the Direct Endorsement Program. However, if the underwriter is unable to decide whether the circumstance is sufficient to make the applicant eligible, he may request prior approval from the Field Office. See Mortgagee Letter 87-3 for a more complete discussion of this issue. 3. Assumptions Where a default or claim is on property sold by the applicant to buyers who took title by assuming the applicant's mortgage, you may process and underwrite the loan after obtaining a statement from the applicant's servicing lender indicating that the applicant's payments on the prior mortgage were current up until the loan was assumed, and you include this statement with the HUD-92900 application. The assumptor's default or claim has no effect on the eligibility of the applicant. These cases may now be processed by Direct Endorsement lenders. This replaces the instructions in Paragraph A.2.c. of Mortgagee Letter 87-3. D. CONTACT If an applicant whose social security number is matched against a Title II default or claim by CAIVRS disputes the accuracy of this information, you should contact: Howard 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 If an applicant whose social security number is matched against a Title I claim by CAIVRS disputes the accuracy of the information, you should contact: Patricia Schader, Chief Department of Housing and Urban Development Debt Servicing Branch, Room 9166 451 Seventh Street, SW Washington, DC 20410 Telephone: (202) 755-6857 Sincerely, Thomas T. Demery Assistant Secretary