The new Uniform Residential Loan Application (URLA) is coming soon. The redesigned URLA will look much different when lenders start using the application in summer 2019. Fannie Mae and Freddie Mac, the industry’s two government-sponsored enterprises (GSEs), announced the Form 1003 redesign in 2016, and implementation is just around the corner.
The new URLA and its accompanying Uniform Loan Application Dataset (ULAD) promises to simplify loan applications, achieve greater efficiency and accuracy, produce better data, and create automated underwriting system (AUS) specifications based on the MISMO v3.4 standard. Moreover, the redesigned 1003 updates information that is collected from borrowers, including new government monitoring information (GMI) data on race, ethnicity, and gender as mandated by revised Home Mortgage Disclosure Act (HDMA) rules.
The mandated changes are keeping some lenders on edge. Don’t despair: Proper preparation and an agile LOS can make the URLA transition easier when your organization starts using the new application.
We asked Colleen Flaxington, data standards implementer at Freddie Mac, and Denise Rivoal, senior project manager at Fannie Mae, to give us more details about the changes that are bearing down on the industry. Here are their answers, edited for clarity:
How will the URLA affect my organization?
The goal of the new URLA is to provide greater efficiency, transparency, and certainty for future homebuyers applying for mortgage loans, and greater consistency for lenders who sell to both Fannie Mae and Freddie Mac. The redesigned URLA takes a design-thinking approach, with dynamic form collecting and a presentation of data tailored to the individual borrower and loan scenario.
When will Fannie Mae and Freddie Mac require the updated AUS datasets to be delivered?
On February 1, 2020, lenders will be required to submit new applications using the updated AUS datasets based on MISMO v3.4. Applications received before February 1, 2020, that have not closed (e.g., loans for new construction) will be accepted in the existing data formats (1003 v3.2 flat file and MISMO v2.3.1 format for DU and the MISMO v2.4 for LP) until February 1, 2021, when only the datasets based on MISMO v3.4 may be submitted. This will provide lenders with the opportunity to close out their existing pipeline of loans which were previously submitted in the existing data formats. An “Optional Use Period” for the updated AUS datasets begins on July 1, 2019 and ends on February 1, 2020.
The GSEs recommend the industry use this time to test:
- POS/LOS updates
- System dependencies to ensure the new data format flows through systems
- Integration with the GSEs
- And conduct training and plan for implementation rollout
- And update policies and procedures as well as any customization they may need to do to support the new datasets.
Lenders may begin testing loan file submissions with each GSE at any time. During the optional use period, the GSE’s AUS systems will continue to accept the legacy formats
(Fannie Mae: 1003 3.2 flat file, MISMO v2.3.1 / Freddie Mac: MISMO v2.4).
What should I be doing now to prepare for the redesigned URLA and updated AUS specifications?
- Identify any data on the redesigned URLA that you do not currently collect, and then develop a plan to obtain that data.
- Reach out to your technology solutions providers to ensure they have copies of the updated AUS specifications.
- Determine the type and amount of testing time you need to conduct with your vendor(s). You should work with them to understand when they expect to be ready to produce and receive the new data interface files.
- If you maintain your own system, work with internal technical and business analysts to scope and schedule the tasks necessary to process the updated AUS specifications.
- Regularly check each GSE’s URLA/ULAD webpage for additional updates to the AUS specifications. Reach out to your GSE representatives as needed to confirm requirements and arrange testing.
Are there any implementation lessons learned you can share from some of the early adopters?
Here are a few of the suggestions heard from industry early adopters:
- Reach out to the joint team or the individual GSE’s ULAD team early and often to obtain clarifications on any requirements you are unsure of.
- Keep asking questions—people are willing to help!
- Refer to the updated AUS documentation throughout the design and development process to understand requirements.
- Actively work toward the mandate date, especially because of potential impacts to all sorts of vendor interfaces.
Where are the URLA and AUS specifications located?
Fannie Mae and Freddie Mac have webpages about the URLA with links to the AUS specifications and supporting documents:
The Loan Product Advisor specification is available from the vendor portal.
If I have specific URLA or AUS data questions, whom should I contact?
A Partner for the Future
The new URLA is a significant change to the mortgage industry. But the industry has seen its share of changes over the years, as well as innovations, regulations, market fluctuations, and so on.
The best strategy to navigate the URLA is to partner with an LOS provider mortgage organizations have trusted for decades to deliver quality service, solutions, and updates. Calyx is such a provider—we’ll be here to guide you through the URLA requirements and ensure you are collecting the right data for a smooth transition. With our industry expertise and our top-of-the-line software, change doesn’t have to be overwhelming.