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Mortgage

Fannie Mae, Freddie Mac unveil new mortgage application form

New URLA form does not include language preference question

Fannie Mae and Freddie Mac this week unveiled the redesigned Uniform Residential Loan Application, following a directive from the Federal Housing Finance Agency to remove the language preference question and housing counseling information from the updated URLA form.

Earlier this year, the FHFA ordered the government-sponsored enterprises to remove the language preference question and housing counseling information from the new URLA form, which is the standardized form used by borrowers to apply for a mortgage.

The move was welcomed by the mortgage business, namely the Mortgage Bankers Association, claiming the language preference question may cause more problems than it solves.

But not everyone welcomed the changes.

Last week, a group of nearly 20 prominent Senate Democrats, including five who are currently running for president, called on the FHFA to undo the alterations to the URLA, claiming the changes could reduce access to credit for mortgage borrowers who are already underserved.

Under the changes proposed earlier this year by the FHFA, the language preference question and housing counseling information are being moved to separate voluntary forms, a change that concerns the Democrats.

The senators believe the decision to move those sections to a separate form “could reduce access to mortgage financing for limited-English proficient mortgage-ready homebuyers and lead to serious financial repercussions.”

The senators also stated that the revised URLA language preference section “clearly informed borrowers that selecting a non-English preference would not guarantee service in that language.”

Therefore, the senators viewed it as “surprising” to see the FHFA “arbitrarily” decided to make the changes to the form.

“Voluntary forms are not adequate disclosures,” the senators wrote. “Lenders will be under no obligation to use the new, voluntary form, and it is unclear how many will elect to do so. This will result in disparate treatment among borrowers who use different lenders.”

But despite those protestations, the GSEs rolled out the new mortgage application form this week without the language preference question and housing counseling information sections, as directed by the FHFA.

According to the GSEs, they are releasing a static version of the URLA form to give the mortgage industry time to “scope additional work needed to implement the redesigned form.”

Beyond removing the language preference question and housing counseling information, the GSEs also state that the new form contains changes to the Borrower Information, Additional Borrower Information, Lender Loan Information, Continuation Sheet, and Unmarried Addendum sections of the form.

Previously, the redesigned URLA, which was originally announced more than three years ago, was scheduled for mandatory use by the mortgage industry by Feb. 1, 2020.

But when the FHFA announced the changes in August, it delayed the implementation of the URLA form to an undetermined date in the future.

The GSEs now state that they are now on track to publish their respective updated automated underwriting system specifications and supporting documents next month and will announce the updated implementation timeline and mandate “before the end of the year.”

The GSEs also state that they will release an interactive PDF version of the redesigned URLA in early 2020.

To read the GSEs’ announcement in full and to see the new redesigned URLA form, click here.

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