The Loan Review System (LRS) is the primary means for FHA and Mortgagees to communicate on defects cited in compliance reviews.
FHA will document the results of each loan review in LRS. Any Findings of noncompliance with Title II Insured Housing Program requirements will be identified in accordance with Single Family Housing Policy Handbook 4000.1, Appendix 8.0 – FHA Defect Taxonomy. For each unacceptable Finding, FHA will request a response and specify allowable remedy(s) from the Mortgagee. The Mortgagee must resolve each unacceptable Finding by submitting a response and remedy requested through LRS.
For additional information see:
Handbook 4000.1 Section V.C.2.b; V.C.3.b and Appendix 8.0 – FHA Defect Taxonomy, available at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh
LRS Information Page: https://www.hud.gov/program_offices/housing/sfh/lender/loan_review_system
LRS User Manual: https://www.hud.gov/sites/dfiles/SFH/documents/LRSUserManual.pdf