What is FHA's Lender Insurance Program (LI) and how does an FHA-approved lender qualify for LI authority?

FHA's Lender Insurance (LI) Program enables high-performing Mortgagees to endorse FHA mortgage loans for insurance without a pre-endorsement review by HUD and requires the Mortgagee to submit an electronic or paper case binder to HUD only when requested.   
 
Once a Mortgagee begins participating in the LI program it must process all loans it underwrites using LI, including any loans not endorsed as of the date of LI authority.  Only those loans subject to a severe case warning can be submitted to the Homeownership Centers (HOC) for endorsement processing.  
 
HUD/FHA-approved Mortgagees seeking Lender Insurance authority must have Unconditional Direct Endorsement approval and a two-year claim and default rate (unless they were created through a merger, acquisition or reorganization among lenders that previously held Lender Insurance authority) that does not exceed 150% of the claim and default rate for the states in which the Mortgagee underwrote loans, unless they were created through a merger, acquisition or reorganization among lenders that previously held Lender Insurance authority.
 
For more information, visit the Lender Insurance Program web page at: https://www.hud.gov/program_offices/housing/sfh/lender/lendins
 
And Handbook 4000.1 I.A.5.b. at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh 


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-03339