Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac have postponed the deadline for mandatory use of the redesigned Uniform Residential Loan Application – the standard form used to apply for a mortgage – from Feb. 1, 2020 to an unspecified date so that additional changes can be made.
The GSEs announced nearly three years ago that they were developing a new application form to replace the current standard 1003 form – the first change for the form in more than 20 years.
The companies claim the redesigned form is better organized and thus improves navigation for users. This improved organization will “support accurate data collection and better efficiency for a more consumer-friendly experience.”
Mortgage lenders were permitted to start using the new form prior to the Feb. 1, 2020, deadline, however, it is unclear how many have opted to do so.
In a bulletin, the Federal Housing Finance Agency (FHFA) directs the GSEs to make several changes to the form and says it will “allow industry participants time” to react to those changes once they are made.
Among the changes, the GSEs are removing the Language Preference question and the Homeownership Education and Housing Counseling question from the redesigned form.
When the new form was first introduced, the Language Question caused some concern for certain industry groups, including the Mortgage Bankers Association, which opposed the inclusion of the question “because of the customer relations issues” it might cause.
Specifically, the MBA asserts that including the question might cause issues for lenders if they could not actually serve borrowers in their preferred language.
The group also cites concerns in connection with unresolved operational and legal questions raised by the language preference information.
“We greatly appreciate [FHFA] Director Mark Calabria’s willingness to revisit these concerns and resolve them effectively,” says Bob Broeksmit, CEO and president of the MBA in a recent letter to MBA members.
The FHFA is directing the GSEs to make several other changes, including the following:
- In Borrower Information, Section 6: Acknowledgments and Agreements, the statement on “Use and Sharing of Information” will be revised to address specific uses of borrower data;
- The Military Service question (Borrower Information, Section 1a.) will be moved to a new section adjacent to Section 7: Demographic Information; and
- Minor edits for consistency and usability will be made throughout the form.
In addition to updating the form, the GSEs have created a common corresponding data set, called the Uniform Loan Application Dataset (ULAD), to ensure consistency of data delivery.
The updating of the form is part of the GSEs’ Uniform Mortgage Data Program, a larger joint initiative, under the direction of the FHFA, to standardize single-family mortgage data in the U.S.