LDP/GSA – to close or not to close??

I bet you didn’t know that your real estate transaction could be derailed by a background check being done on the seller, buyer’s agent, listing agent, appraiser or other licensed professionals associated with your transaction, did ya??  it doesn’t happen very often, BUT that doesn’t mean that it can’t!  lenders scrub the names of all parties involved in a residential real estate transaction against a list commonly referred to as LDP/GSA previous to closing.  what is this ‘list’ you ask?

Limited Denials of Participation (LDP) and Government Services Administration (GSA) Lists:

This government database holds information concerning parties who have been denied participation in FHA’s insurance programs OR other government contracts or programs because of wrongdoing.

Examine/search the list for all parties to the transaction and the loan application (borrower, co-borrowers, realtor, appraiser, seller, licensed professionals contracted to provide mechanical certifications, broker, originator, etc.).

If any party who has been “searched” appears on the LDP/GSA lists, the loan application is not eligible for FHA insurance and the loan must be denied.

This is not only applicable to FHA insured mortgages – lenders commonly use this on conventional loans as part of their overall Loan Quality Procedures as well.

I see this rear it’s ugly head most often when there is a common name as part of the transaction (such as John Smith as the listing agent).  One measure that can be taken is to provide full names including middle name (not just middle initial).

be sure to tune in to REAL TIME REAL ESTATE DFW @ 1pm Saturdays on KWRD Christian Talk radio 100.7 FM The Word OR live online @ www.accordingtocole.com


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