Does the Loan Review System (LRS) permit lenders to address all loan level findings cited by FHA?

Lenders cannot address all findings reported in the Loan Review System (LRS).  Lenders can only provide responses to address findings with an Unacceptable rating (Severity Tier 1 or Tier 2 defects).  Lenders cannot respond to findings with a Deficient rating (Severity Tier 3 or Tier 4 defects).

Instructions for addressing Unacceptable findings are outlined in Section 1 of the LRS User Manual which is available at:

LRS Home Page:

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