The LI Program was offered beginning on January 1, 2006. The LI Program enables high-performing FHA-approved Direct Endorsement (DE) lenders, with acceptable default and claim rates, to endorse FHA mortgage loans without a pre-endorsement review conducted by FHA.

An LI approved lender performs its own pre-endorsement review and submits loan level data to FHA via the FHA Connection, Business to Government (B2G) or other electronic means. FHAC

• performs an automated verification process to check the data for accuracy and completeness, and
• for those loan level data submissions that clear all of the risk-mitigation edits that FHA has in place
• the system generates a mortgage insurance certificate electronically to serve as evidence that the mortgage has been insured, and
• the lender is not required to provide a case binder in advance of endorsement.

Note: If a loan does not clear the FHA edits, a lender may need to submit a case binder to FHA. If the LI lender has been approved for electronic submission, the lender may submit an electronic case binder (eCB) as opposed to a hard copy case binder.

Reference: For more information on

• LI endorsement processing, see HUD 4155.2 8.C.3
• requirements for LI lender pre insurance review, see HUD 4155.2 8.A.2
• LI case binder submission, see HUD 4155.2 8.B.7, and
• LI lender submission requirements for case binders selected for PETR, see HUD 4155.2 9.B.1.d.

The LI Program reduces a lender's submission of case binders to FHA and the need to have FHA review the application for mortgage insurance before FHA endorsement of the mortgage for insurance. The need to submit case binders to satisfy Notices of Return (NORs) is also dramatically reduced.

In those instances in which FHA does require submission of a case binder, for lenders choosing to submit case binders electronically, all mailing costs associated with the mortgage insurance endorsement process are eliminated.

Reference: For more information in LI endorsement processing, see HUD 4155.2 8.C.3.

Under the LI Program, despite the fact that lenders do not need to have an FHA pre-endorsement review of loans, FHA does select a sample of mortgages for post endorsement technical review (PETR).

Note: A lender may submit case binders for PETR in paper or electronic format.

Reference: For more information on submission requirements for case binders selected for PETR, see HUD 4155.2 9.B.1.d.

The regulations governing the LI Program may be found in

• 24 CFR 203.4
• 24 CFR 203.6, and
• 24 CFR 203.255(f).