An FHA applicant has a federal student loan that defaulted three years ago. The creditor agency confirms the debt remains delinquent and unresolved. With no applicable exemption or waiver, how does that debt affect federal loan-insurance eligibility?
Correct Answer
A) The verified unresolved delinquent federal non-tax debt prevents eligibility until resolved under applicable standards
A. The verified unresolved delinquency prevents eligibility on these facts. Federal loan insurance is generally unavailable to a person delinquent on federal non-tax debt unless a relevant exception or waiver applies. Three elapsed years alone do not resolve a continuing delinquency. The responsible agency’s resolution standards matter. Scope and exceptions: Investigate inaccurate or outdated records rather than treating every database hit as final. The original explanation’s reference to an accepted repayment plan must not imply that merely enrolling in any plan establishes resolution. This is not a blanket ban on all private credit. Source: Section 901.6(a) — https://www.ecfr.gov/current/title-31/subtitle-B/chapter-IX/part-901/section-901.6 CAIVRS overview — https://entp.hud.gov/qckstart/qckstrt-caivrs.cfm
Why This Is the Correct Answer
A. The verified unresolved delinquency prevents eligibility on these facts. Federal loan insurance is generally unavailable to a person delinquent on federal non-tax debt unless a relevant exception or waiver applies. Three elapsed years alone do not resolve a continuing delinquency. The responsible agency’s resolution standards matter. Scope and exceptions: Investigate inaccurate or outdated records rather than treating every database hit as final. The original explanation’s reference to an accepted repayment plan must not imply that merely enrolling in any plan establishes resolution. This is not a blanket ban on all private credit.
Why the Other Options Are Wrong
Option B: CAIVRS reports only unpaid tax liens, so a student loan is not in it
CAIVRS is not limited to unpaid tax liens.
Option C: A CAIVRS hit is advisory, and on-time payments since clear it
Paying unrelated accounts does not resolve this debt.
Option D: CAIVRS screens conventional lending rather than government lending
CAIVRS supports federal credit screening, not merely conventional underwriting.
Exam Tip
Verify the federal debt’s status and documented resolution, rather than relying on elapsed time or unrelated good payments.
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