For the prior segment of this video covering the borrower’s and transaction agent’s use of the Uniform Residential Loan Application (URLA) to document the borrower’s personal identifying information and income, click here.

Assets and liabilities and other property owned by the borrower

Editor’s note – This video addresses the redesigned Uniform Residential Loan Application (URLA) which was scheduled to become mandatory February 2020. Implementation of the redesigned URLA has been pushed back to March 2021 in response to the COVID-19 pandemic.

The URLA presently in use and the redesigned URLA are based on the same fundamentals, though feature different sequencing and some distinctions in content.

After information concerning the borrower’s personal identifying information and income are entered into the Uniform Residential Loan Application (URLA), the next component of the mortgage application covers the borrower’s assets and liabilities.

In Section 2: Financial Information: Assets and liabilities, the borrower, with the help of their transaction agent, enters information about the things they own that are worth money which qualify them for the loan. In a word: assets.

The borrower will also enter information about the liabilities and debts they pay each month, such as credit cards, student debt and alimony.

Why does the lender want this information? Well, it’s pertinent since the buyer’s liabilities affect their ability to repay the mortgage.

One other thing to keep in mind in relation to this topic. The buyer may not want to disclose all their assets when filling out this form with the transaction agent. A balance needs to be struck between maintaining financial privacy and disclosing enough assets to get creditworthiness clearance so the mortgage will be funded.

The next component of the loan application is titled Section 3: Financial Information – Real Estate.

In this section, the borrower lists all the properties they currently own, and their financial obligation on these properties.

If this is the borrower’s first property, they will check the box stating, “I do not own any real estate.”

The information called for on this page includes:

  • the property address;
  • property value; and
  • mortgage loans which encumber the property, including the monthly payment and outstanding balance.

If the borrower owns multiple properties, space is provided for the entry of this parallel real estate data.

Continue watching next week for a deep dive into Section 4: Loan and Property Information.