Standard FHA Processor Duties - LDP checks

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

One of the standard FHA processor responsibilities is obtaining LDP checks on all FHA loans. But what on earth are these things and what do they mean? Let’s take a closer look at these lists.

LDP stands for “Limited Denial of Participation.” Most often a person or business is found on this list as the result of a HUD field office taking action against a person or party who fails to comply with HUD program standards. In most cases, the causes of an LDP action can be remedied by the party because such actions include provisions for an appeal process with a speedy conference at the HUD office location that issued the LDP action. Most often LDP actions are effective for one year. Any person found to be listed on the LDP list must be prohibited from participation in any HUD program(s) that are specifically indicated on the listing.

As a processor, your responsibility is to conduct a name search for each borrower, seller, loan originator, real estate broker/agent and appraiser to assure that none of those parties to the FHA transaction are found on the LDP list. There are two ways to access the LDP list:

1. You can access the Limited Denial of Participation list right in FHA Connection at the Approval Lists screen. Simply scroll down the list of links at the Approval Lists page and click on Limited Denial of Participation.

2. Because the LDP list is a public website, you do not need FHA Connection authorization to access the list. Simply go to http://www.hud.gov/offices/enforce/ecldp.cfm and click on Limited Denial of Participation List.

Once you have accessed the list, there are two ways to conduct searches for each borrower, seller, loan originator, real estate broker/agent and appraiser:

1. You can print the entire list (which is usually only two letter-size pages in length) and simply write in where each name would fall on the list if it were to be found in alphabetical order by last name. (example- for a borrower named Jennifer Jones, you would simply go to where you would find the last name Jones on the list and write in “Jones, Jennifer” and so on for each borrower, seller, loan originator, real estate broker/agent and appraiser). Then simply add the entire printed list to your loan file and include it in the underwriting submission package.

2. You can conduct an individual name search by entering the party’s last name, first name in the search box atop the screen and click “Search.” IF the party’s name is not found on the list, the screen should reflect the message “Records Found: 0.” You would then print out each individual search screen and add all to your loan file and include in your underwriting submission package.

**TIP** I personally prefer the first option- print out the list and simply write in each party’s name where it would fall on the list because it is less time-consuming than conducting the individual searches and printing each result.

As long as you do not find any borrower, seller, loan originator, real estate broker/agent or the FHA appraiser included on the list, you have nothing further to be concerned with and can conclude you’ve met your responsibility. Your final step is to return to the MCAW in your software system and enter comments in section 18 to confirm the date and/or page number where you’ve confirmed your search results.

However, if you do find that one or more of the parties is found on the LDP list, you will need to notify the office reflected on the list of your finding to obtain further instructions on how to proceed with processing.

For further information on Limited Denial of Participation, you may refer to HUD’s Memorandum on Limited Denial of Participation or call 202-708-3041 with questions.

Next week I will discuss processor responsibilities with GSA checks.

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.