More than 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. The companies later dictated that lenders would be required to begin using the new loan application by Feb. 1, 2020.
But that all changed earlier this year when the government-sponsored enterprises delayed the mandatory use of the redesigned Uniform Residential Loan Application at the direction of the Federal Housing Finance Agency.
The implementation of the URLA was postponed to an unspecified date in the future, but the GSEs revealed Wednesday a new date for the mandatory the use of the new URLA.
According to the GSEs, lenders will now be required to begin using the new URLA by Nov. 1, 2020.
The move to delay the use of the URLA came at the directive of the FHFA, which ordered the GSEs remove the language preference question and housing counseling information from the updated 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, which claimed that the language preference question may cause more problems than it solves.
But not all observers were on board with the changes.
In October, a group of nearly 20 prominent Senate Democrats 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.
Despite the Democrats’ protestations, the GSEs later rolled out the new mortgage application form without the language preference question and housing counseling information sections, as they were directed to do by the FHFA.
Now, the GSEs are establishing a new date for the mandatory use of the newly redesigned URLA form and laying out a timeline for its implementation.
After a period of testing, lenders may begin using the new URLA form on Sept. 1, 2020. From that date through Oct. 31, 2020, use of the new URLA form is optional.
But after November 1, the use of the new URLA form is mandatory.
If there are any loan applications that were begun on the old form but still unprocessed on November 1, the GSEs will allow those to process, as long as the lender notifies the agencies “as soon as possible.”
After Nov. 1, 2021, the current URLA form will no longer be accepted by the GSEs.
To read the full URLA implementation timeline from the GSEs, click here.
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