In August of 2016, Fannie Mae and Freddie Mac (collectively the “GSEs”) released a redesign of the Uniform Residential Loan Application (the “URLA”) or Form-1003. As previously reported by DocMagic in 2016, this is the first redesign of the form in over 20 years.
Since the 2016 announcement, DocMagic has published several articles on the topic. When originally announced, the GSEs did not include a required use date but it was widely expected that use of the form would begin in 2018 as it would support the revised HMDA government monitoring information collection with the revised Demographic Information section of the URLA. However, in 2017 the GSEs provided a timeline for implementation that clarified lenders should not use the forms until at least 2019. The GSEs obtained approval from the CFPB to use the Demographic Information as an addendum to the existing application form to support the collection of the revised government monitoring information. Lenders have thus been using the Demographic Information Addendum with loan applications since January 2018.
The Forms
The current application form is generally made up of one main form that collects various information about the borrower(s), property, and loan, whereas the redesigned URLA splits the application into five different forms: the Borrower Information Document, the Additional Borrower Document, the Unmarried Addendum, the Lender Loan Information Document, and the Continuation Sheet.
The forms present a change to an application process that has been in place for decades. One of the stated goals of the redesign effort by the GSEs was to make the collection of information from consumers more efficient and make the forms more usable by consumers. This reflects an overall change to the intended audience of the redesigned URLA. With the current application form, the intended audience is clearly the lender, with the form providing Income, Asset, and Liability information in aggregated, easy to read formats for loan officers, processors and underwriters.
The new Borrower Information Document, Additional Borrower Document and Unmarried Addendum are revised to walk the borrower through the application process, collecting income information, employment information, and liabilities with their associated asset (e.g., real estate owned) for example. This means all borrower income, assets, and liabilities are spread throughout the forms. On the Borrower Information Document, the subject property and loan information are not entered until Section 4, after all the borrower’s information is collected.
The Lender Loan Information Document is the only portion of the redesigned URLA that is geared toward an intended lender audience. This form includes details about the loan and property, e.g., how the property will be vested, the loan type, the interest rate, the amortization type, etc. Proposed housing expense information is also included in the Lender Loan Information Document, though it is no longer shown along with the borrower’s current (present) housing expense.
The Unmarried Addendum will replace various state-specific documents generally referred to as Civil Union/Domestic Partnership Addendums. The Unmarried Addendum is to be used anytime the borrower indicates their marital status is unmarried. The form asks if there is any other person who may have real property rights similar to a spouse.
Data Changes
In addition to the redesigned forms, the GSEs have also created the Uniform Loan Application Dataset (“ULAD”). This provides a mapping for each field on the redesigned URLA to a MISMO v3.4 data structure. While many in the industry may not yet be using a MISMO v.3.4 xml for providing DocMagic loan data, DocMagic has created extensions to lower versioned MISMO structures to allow support for the ULAD and redesigned URLA.
To support the redesigned URLA, the GSEs have also launched a new version of Desktop Underwriter (“DU”) and Loan Product Advisor (“LP”). This means that lenders who wish to use the redesigned URLA must support ULAD in order to submit data to DU and LP.
DocMagic’s review of the new URLA led to the addition of some 50+ new data points to our data structure. These new data fields come from new items that were not previously collected or a change to existing items.
Implementation
DocMagic is working to provide its users with a seamless transition to the revised URLA. Although the earliest this form can be used is applications dated on or after July 1, 2019, DocMagic has completed many hours of data gap analysis, review of new data fields and comparison of older MISMO versions to ULAD and v3.4, and a restructure of DocMagic Online to support the redesigned URLA well ahead of that date so users may begin testing and to assist our integration partners with their implementation.
DocMagic provided complete mappings to our integration partners on January 31, 2019.
The restructured DocMagic Online (“DMO”) is scheduled for production release in April 2019. DMO will allow for collection of all required data to complete the redesigned URLA forms. The user will be required to indicate which version of the application they are using, “Pre-2020 URLA” or the “2020 URLA”. This will drive some functionality in DMO to enable certain data fields, or in two cases to switch out the input screen to support both old and new Declarations and Details of Transaction. This will also allow users to test the redesigned URLA ahead of the implementation date.
As a reminder, the GSEs have indicated lenders may begin using the redesigned URLA forms with applications dated on or after July 1, 2019. Lenders are required to use the redesigned URLA with applications dated on or after February 1, 2020, but will still accept loans using the prior versions of the application for applications dated prior to that date. As of February 1, 2021, the GSEs will no longer accept the prior versions of the application for any loan no matter the application date.
DocMagic will continue to provide customers with updated information and training on the new URLA as the acceptance date approaches.
