The Federal Housing Finance Administration (FHFA) has released its proposed changes to the Uniform Residential Loan Application (URLA). Though now public, these changes will not immediately go into effect. These modifications to the industry-wide form still have to be reviewed and approved by the Consumer Financial Protection Bureau (CFPB) before becoming part of nearly all real estate transactions. The new form will be finalized in 2017 and will go into effect on January 1, 2018. [See RPI Form 202]
The URLA is required by Fannie Mae and Freddie Mac for homebuyers applying for a mortgage on a single family residence (SFR). It is also required by the Federal Housing Administration (FHA), Veterans Administration (VA) and the U.S. Department of Agriculture’s (USDA’s) Rural Housing Service. Thus, its presence in the real estate industry is integral and broadly felt.
Changes to the new URLA include:
- a cleaner design with more open, white space;
- consumer-friendly language and instructions;
- some new and updated fields to reflect today’s lending process (as the form was last updated more than 20 years ago and is showing its age); and
- updated government demographic information to meet new Home Mortgage Disclosure Act (HMDA) requirements.
An updated Spanish version of the form will be published by the FHFA as well.
Consumers, lenders and other industry professionals put the new URLA through seven rounds of testing to ultimately simplify and streamline the form.
The new form will be available in a dynamic, fillable format online, as well as in paper format.
Prepare for the change
What the URLA does not change is the application process used by the lender. Still, some preparation is wise to ensure a smooth transition over to use of the new form — just recall the closing delays experienced at the end of 2015 while lenders reluctantly adjusted to the new Loan Estimate and Closing Disclosure. [See RPI Form 204-5 and 402]
Mortgage loan originators and other real estate and lending professionals can familiarize themselves with the form now. Further, they can identify information on the new URLA that they currently don’t collect but will have to once the new form is adopted. For example, you will need to collect information from the homebuyer on the source and type of any down payment gifts, something that is missing in the prior incarnation of the form.
Or, you can attend an upcoming webinar on building your awareness of URLA changes, including a walkthrough of all the changes made to the URLA.
For a sample of what the new URLA will look like, see Fannie Mae redesigned Form 1003. But remember, the changes are not yet final and the existing version of the form is to be used until the updated URLA becomes effective on January 1, 2018. [See RPI Form 202]
Editor’s note — Rest assured, we will be updating our version of the URLA in the RPI Form library once the new changes have been approved by the CFPB and released to the public.