According to a recent Fannie Mae press release, the optional use period for the updated Uniform Residential Loan Application (URLA) — during which use of the new version of the form will not be mandatory — has been postponed indefinitely.
Further, the effective date after which the updated form becomes mandatory (previously February of 2020) has also been kicked down the road.
The reason for the last-minute rescheduling? More changes to the form, of course!
The times they are a-changing
The URLA is an inevitable part of almost all real estate transactions involving single family residences (SFRs). It is authored by the FHFA — Fannie Mae and Freddie Mac’s regulator — and is required by:
- Fannie Mae;
- Freddie Mac;
- the Federal Housing Administration (FHA);
- the Veterans Administration (VA); and
- the U.S. Department of Agriculture (USDA)’s Rural Housing Service.
In addition to ostensibly giving the form a more modern presentation, the previously envisioned update to the URLA also included:
- consumer-friendly language and instructions;
- new interactive fields to reflect a more contemporary lending process;
- updated government demographic information to meet new federal Home Mortgage Disclosure Act (HMDA) requirements; and
- a preferred language question allowing borrowers to indicate whether they prefer to communicate in a language other than English.
The FHFA, however, has had a change of heart regarding some of these updates. In particular, two of the questions present on the redesigned version of the form will be removed:
- the Homeownership Education and Housing Counseling question, designed to collect information about borrowers’ homeownership education and counseling history in addition to providing borrowers with housing counseling resources; and
- the preferred language question.
These questions will be relocated to a “voluntary consumer information form” not included in the URLA. Thus, they will still be around — just in a neutered form. Fannie Mae gives no indication as to when this extra form will be developed, or under what circumstances it will be presented to borrowers. As the form will be voluntary, not mandatory, these questions are essentially relegated to the periphery and will likely be ignored entirely.
The newest update to the form will also:
- revise the Acknowledgements and Agreements section to address uses of borrowers’ data;
- relocate the Military Service question to a different section of the form; and
- include further minor edits for “consistency and usability,” a catchall term that covers any cosmetic alterations.
The current timeline provided by Fannie Mae does not indicate when these updates will be ready, or when the optional use period for the form will officially begin.
Stay tuned for further updates to this process as we report them, and the final version of the form once it becomes available. [See RPI Form 202]