Can a new lender created through merger, acquisition or reorganization qualify for LI authority?

Lenders that lack a 150 percent compare ratio, may be eligible for Lender Insurance (LI) approval if 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 (DE) authority;
  •       have had one or more lenders 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 lenders 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 lenders 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 lender prior to the merger, acquisition, or reorganization will continue to exercise those responsibilities for the new lender.

For additional information see the Lender Insurance Program web page at http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/lender/lendins.

Handbook 4000.1 I.A.5.b. is available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh