The applicant has an outstanding judgement. Can it be paid in full at closing?
A judgment may be paid off at closing as long as loan funds or seller concessions
are not used to pay off the debt. The declarations will need to indicate the
applicant has an outstanding judgment, since it is outstanding at loan
application. It is the lenders responsibility to ensure debts paid at closing are
paid with the borrower’s personal funds and that any state specific requirements
that may influence the validity of the first lien position have been considered.
Can overdraft protection attached to a checking account be used as a non-
traditional tradeline?
No, overdraft protection is not a credit obligation and is not used as an
alternative trade line.
An applicant has a clear CAIVRS result but has had a wage garnishment for over
3 years on a US Education loan. Is the applicant eligible since the CAIVRS was
clear?
No, even when the applicant’s CAIVRS is clear, if the credit indicates there is a
delinquent federal debt, the applicant is ineligible unless the debt is paid in full,
or a release of liability is documented.
How is delinquent child support verified to determine if it is subject to
administrative offset? If CAIVRS is clear, is that sufficient?
Administrative offset allows for the interception of certain federal payments in
order to collect past due child support. As delinquent child support is not a
Federal debt, it is not reported to CAIVRS. Thus, a clear CAIVRS alone would not
provide evidence there is not an administrative offset in place.
Each state has an office(s) of child support enforcement. When a state refers
delinquent child support to the Department of Treasury, they simultaneously
report the delinquent child support to the credit bureaus. Lenders typically
discover delinquent child support from the credit report, and they should then
conduct due diligence to learn whether an administrative offset referral was
made by the state to the Department of Treasury. Verification from the child
support enforcement agency may be necessary to verify if the delinquent child
support is subject to administrative offset.
Lenders must document the loan file with verification an applicant with
delinquent child support is not subject to administrative offset. This can be
accomplished by obtaining verification in writing from the child support
enforcement Agency or, if obtaining a written verification is not possible,
documenting the loan file of the verbal conversation held.
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