How can a lender be reinstated once terminated through the Credit Watch initiative?

A Mortgagee with a Credit Watch termination may request to have its authority reinstated no earlier than six months after the effective date of the termination. 

The Mortgagee must obtain an independent review of the terminated area’s operation and mortgage origination or underwriting, specifically including the FHA-insured mortgages cited in the termination notice. The analysis must identify the underlying cause for the Mortgagee’s high default and claim rate. The review must be conducted and issued by an independent Certified Public Accountant (CPA) qualified to perform audits under Government Auditing Standards as set forth by the General Accounting Office. 

The Mortgagee must submit a corrective action plan to address each of the issues identified in the CPA’s report, along with evidence that the plan has been implemented. FHA reserves the right to impose additional requirements for reinstatement. 

The application for reinstatement must be submitted through the Lender Electronic Assessment Portal (LEAP). The application must be accompanied by the CPA’s report and the corrective action plan. 

The LEAP User Manual is available at: under the LEAP Information link in the Approvals & Renewals section. 

For additional information see Handbook 4000.1 V.E.3.a.iii.(E) at

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-01087