What is the Loan Review System (LRS) and what HUD/FHA system did it replace?

Mortgagees began using the Loan Review System (LRS) for all loans selected by FHA for mortgagee monitoring and loan review processes on or after May 15, 2017.
The Loan Review System (LRS) is the electronic platform for FHA’s Title II Single Family Mortgagee monitoring and loan review processes including:

  • Various Post-Endorsement Loan Reviews
  • Unconditional Direct Endorsement Authority Test Cases
  • Lender Monitoring Reviews
  • Lender Self-Reporting of Fraud and Other Material Findings. 

FHA will document the results of each review in the Loan Review System and will use its Single Family Housing Loan Quality Assessment Methodology (Defect Taxonomy) to identify and capture detailed information about any Findings related to compliance with FHA underwriting requirements. FHA will specify the remedies and response that are required from the Mortgagee. The Mortgagee must respond to any Material Findings using the functions provided in the Loan Review System.

The LRS replaced the:

  • post-endorsement technical review (PETR) functions performed by the FHA Connection/Underwriting Review System (URS) for all loans selected for review on or after May 15, 2017;
  • URS test case review functions for post-closing test cases submitted by Mortgagees who receive a Direct Endorsement (DE) Program Test Case approval letter dated on or after May 15, 2017;
  • lender self-reporting functions managed in Neighborhood Watch for all loans reported by lenders on or after May 15, 2017.

Mortgagees can access the LRS User Manual and recorded webinars which provide information on responding to findings, submitting self-reports and other LRS functions on HUD’s Loan Review System web page at: https://www.hud.gov/program_offices/housing/sfh/lender/loan_review_system
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-03854