MortgageReal Estate

Fannie Mae, Freddie Mac delaying use of new Uniform Residential Loan Application

FHFA asked GSEs to make changes to form

Nearly three years ago, Fannie Mae and Freddie Mac announced that they were changing the standard mortgage application form for the first time in 20 years. As the development process moved forward, the government-sponsored enterprises dictated that lenders would be required to begin using the new loan application by Feb. 1, 2020.

But that’s not the case anymore.

Fannie and Freddie announced Thursday that they are delaying the mandatory use of the redesigned Uniform Residential Loan Application to an unspecified date in the future.

According to the GSEs, they have been directed by the Federal Housing Finance Agency to make certain changes to the new URLA form. As a result, the GSEs are now no longer requiring lenders to use the new URLA by Feb. 1, 2020.

This isn’t the first delay in the URLA development process. According to the bulletin from the GSEs, earlier this summer, the FHFA directed Fannie and Freddie to postpone the optional use period for the redesigned URLA and automated underwriting system implementations.

The bulletin states that the FHFA has now directed the GSEs to make several changes to the form.

In order to “allow industry participants time to make the necessary changes,” the FHFA and the GSEs are extending the deadlines for implementation of the URLA and AUS datasets and the mandatory use of the redesigned form and data will no longer begin on Feb. 1, 2020, the GSEs said.

At issue are several questions that appeared on the redesigned form, one of which raised concern at the Mortgage Bankers Association and other groups.

According to the GSEs, the Language Preference question and the Homeownership Education and Housing Counseling question will now be removed from the redesigned URLA form and included on a separate voluntary form.

The MBA said that it previously took issue with the Language Question and communicated those concerns to the FHFA.

“As you recall, MBA opposed the inclusion of the language preference question in the URLA because of the customer relations issues the question would cause if lenders could not actually serve borrowers in their preferred language, and due to unresolved operational and legal questions raised by the language preference information,” MBA President and CEO Bob Broeksmit said in a letter to MBA members. “We greatly appreciate Director Mark Calabria’s willingness to revisit these concerns and resolve them effectively.”

Beyond the relocation of those two questions to a new voluntary form, the FHFA is also directing the GSEs to make several other changes, including:

  • In the Borrower Information, Section 6: Acknowledgments and Agreements, the statement on “Use and Sharing of Information" will be revised to address specific uses of borrower data
     
  • The Military Service question (Borrower Information, Section 1a.) will be moved to a new section adjacent to Section 7: Demographic Information
     
  • Minor edits for consistency and usability will be made throughout the URLA form

According to the GSEs, the date for using the redesigned URLA is now moved to an unspecified timeframe in the future.

“The GSEs and FHFA will assess the impact of these changes to the timeline and will provide more information about the new implementation dates as soon as it is available,” the GSEs said in a bulletin.

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