FHA Single Family Housing Policy Handbook 4000.1, Part I — b. Title II Single Family Lender Insurance Authority (01/24/2022)

FHA Single Family Housing Policy Handbook 4000.1, Part I — b. Title II Single Family Lender Insurance Authority (01/24/2022)

b. Title II Single Family Lender Insurance Authority (01/24/2022) i. Scope of Authority Approval to participate in FHA’s Title II Single Family Lender Insurance Program permits a Mortgagee to endorse Mortgages for insurance with no prior review by FHA. (A) Definitions (1) Lender Insurance Authority Lender Insurance (LI) Authority permits a Mortgagee with Title II Unconditional Direct Endorsement authority to endorse Single Family Mortgages for insurance without prior review by FHA. (2) Lender Insurance Compare Ratio The Lender Insurance (LI) Compare Ratio is the percentage of Mortgages underwritten by the Mortgagee that are in claim or default status compared with the percentage of Mortgages in claim or default status for all Mortgagees operating in the same state(s) over the preceding two-year period. I. DOING BUSINESS WITH FHA A. FHA Lenders and Mortgagees (09/20/2021) 5. Supplemental Mortgagee Authorities Handbook 4000.1 36 Last Revised: 11/26/2025 (B) Standard To obtain Title II Single Family LI Authority, the Mortgagee must meet the eligibility requirements as stated below and successfully complete the application and approval processes. ii. Eligibility Requirements (A) Standard To obtain LI approval, the Mortgagee must: • be an FHA-approved Mortgagee with Unconditional Direct Endorsement authority; and • have an LI Compare Ratio that is at or below 150 percent. (1) Exception for New Mortgagees Created by Merger, Acquisition, or Reorganization Resulting in New FHA Lender Identification Number If the Mortgagee lacks an LI Compare Ratio because it was recently created by a merger, acquisition, or reorganization that resulted in the issuance of a new FHA Lender ID, it must: • have Unconditional Direct Endorsement authority; • have had one or more Mortgagees with LI Authority at the time of the merger, acquisition, or reorganization, participate in the merger, acquisition, or reorganization; • have had an acceptable LI Compare Ratio for all Mortgagees with LI Authority participating in the merger, acquisition, or reorganization, at the time of the merger, acquisition, or reorganization; • have an LI Compare Ratio that is derived from aggregating the claims and defaults of all formerly FHA-approved Mortgagees participating in the merger, acquisition, or reorganization that is not more than 150 percent; and • ensure that the management and staff who were involved with LI processing for the FHA-approved Mortgagee prior to the merger, acquisition, or reorganization will continue to exercise those responsibilities for the new Mortgagee. iii. Application and Approval (A) First-Time Applicants (1) Standard The Mortgagee must apply for LI Authority through FHAC. I. DOING BUSINESS WITH FHA A. FHA Lenders and Mortgagees (09/20/2021) 5. Supplemental Mortgagee Authorities Handbook 4000.1 37 Last Revised: 11/26/2025 (2) Required Documentation Before applying, the Mortgagee must make a written determination that it will participate in the LI Program. The Mortgagee’s written determination to participate in the LI Program must be signed by a Principal Owner or Corporate Officer. The Mortgagee must retain a copy of such written determination and make it available to HUD upon request. (3) Approval FHAC will automatically approve or deny the Mortgagee’s LI Authority based on the Mortgagee’s Direct Endorsement approval status and LI Compare Ratio. (B) Application from Mortgagee Created by Merger, Acquisition, or Reorganization Resulting in New FHA Lender Identification Number (1) Standard Mortgagees created through mergers, acquisitions, or reorganizations that are issued a new FHA Lender ID must apply for LI Authority through LEAP. (2) Required Documentation The Mortgagee’s application must contain the following: • a copy of the Acknowledgment of Terms and Conditions for LI screen in FHAC, printed and signed by a Corporate Officer; • the name and contact information of the LI contact person and, at the discretion of the Mortgagee, the name and contact information for the back-up LI contact person; • the name and FHA Lender ID of the new Mortgagee; • the names and FHA Lender IDs of the Mortgagees participating in the merger, acquisition, or reorganization; and • information identifying the management and staff experienced with LI processing employed by the new Mortgagee or transferring from a Mortgagee that previously held LI approval, and describing how the management and staff will continue to exercise LI responsibilities for the new Mortgagee. (C) Reinstatement A Mortgagee that voluntarily withdrew its LI Authority may apply for reinstatement. (1) Standard The Mortgagee must meet the LI Eligibility Requirements. I. DOING BUSINESS WITH FHA A. FHA Lenders and Mortgagees (09/20/2021) 5. Supplemental Mortgagee Authorities Handbook 4000.1 38 Last Revised: 11/26/2025 (2) Required Documentation The Mortgagee must apply for reinstatement of LI Authority by submitting a Change Request for Add Insurance Authority in LEAP and include the following: • a copy of the Acknowledgment of Terms and Conditions for LI page from FHAC, signed by a Corporate Officer; • detailed description of the reason(s) the LI Authority was previously withdrawn; • description of the corrective action taken, if necessary; and • the name and contact information of the LI contact person and, at the discretion of the Mortgagee, the name and contact information for the back-up LI contact person. iv. Post-approval Requirement (A) Lender Insurance Contact Information A Mortgagee approved for LI Authority must maintain the Mortgagee’s LI contact information in the Lender Insurance Contact function in FHAC.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part I — b. Title II Single Family Lender Insurance Authority (01/24/2022) · source URL · snapshot 8c03836f77f317e1