Must I Use the New URLA?
Must I Use the New URLA?
What’s an URLA? You’ve probably known it as Form 1003 or 65 or “Uniform Residential Loan Application.” It’s the application you’ve been accepting for mortgage loans. Due to revisions stimulated by the expanded Demographic Information requirements of HMDA, Fannie & Freddie started looking into revising this application. So, if you sell loans to either of them, beginning on July 1, 2019, you will be required to use the newly formatted application form.
However, the question has arisen as to whether financial institutions who do not sell in the secondary market are required to change their application form. The short answer is “No.” If you retain all your loans in portfolio, you’re allowed to continue using the old 1003 with the new Demographic Information page. But you may want to give that some more thought. Often times when Banks are strapped for liquidity, it’s easier to sell off part of your mortgage portfolio than an investment. If that’s your norm, then only loans where the new URLA was used for the application will be saleable to Fannie or Freddie vendors. So, if you want to be forward-looking, it would be advisable to start using the new URLA.
There are other things to also consider. How do you take applications – paper or electronically? How will expanded data flow from your application method to your loan documentation software? Is the expanded data flow accurate and complete? How will the second applicant sign the initial borrower’s section. July 1 is coming quickly. Now is the time to establish your process and make changes as needed.
For additional information contact the author at edehmey@fosaudit.com.