Can a Mortgagee respond to all Findings in the Loan Review System (LRS)?

Yes. However, there are four potential severity tiers, one of which is assigned to each Finding based on the size and nature of the deviation from FHA requirements. Severity tiers dictate whether a response is required in the Loan Review System (LRS):
  • Tiers 1 and 2 Findings are unacceptable, and require a response. Potential remedies are listed in each defect area.
  • Tiers 3 and 4 Findings are deficient and do not impact the loan’s eligibility for FHA insurance. These Findings do not require a response, but optional responses will be accepted in LRS.  
The process for responding to Findings is the same for all tiers. Instructions for addressing findings are outlined in the Active Reviews section of the LRS User Manual, which is available at: https://www.hud.gov/sites/dfiles/SFH/documents/LRSUserManual.pdf
 
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-01204