How will a Mortgagee communicate with FHA regarding defects noted in Mortgagee monitoring and loan reviews?

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 review in LRS and will use its Single Family Housing Policy Handbook 4000.1, Appendix 7.0 – FHA Defect Taxonomy to identify and capture detailed information about any unacceptable Findings related to compliance with FHA underwriting requirements. For each unacceptable Finding in the LRS, FHA will request a response and specify the allowable remedy(s) that are required from the Mortgagee. The Mortgagee must resolve each unacceptable Finding using the functions provided in LRS.
For additional information see:

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-01132