New mortgage application won’t be mandatory for 11 months.
It’s been nearly four years since Fannie Mae and Freddie Mac announced that they were changing the standard mortgage application form for the first time in 20 years, but it’ll be another 11 months until the mortgage industry is required to use the new Uniform Residential Loan Application.
Fannie and Freddie announced last week that they are delaying the mandatory use of the new URLA until March 1, 2021, due to the impact of the coronavirus on the mortgage business.
Prior to this change, the use of the new URLA was supposed to mandatory on Nov. 1, 2020, but that’s not the case anymore.
This isn’t the first time that the new URLA has been delayed.
Originally, the government-sponsored enterprises dictated that lenders would be required to begin using the new loan application by Feb. 1, 2020.
But last year, the GSEs delayed the mandatory use of the redesigned URLA at the direction of the Federal Housing Finance Agency.
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.
The GSEs later rolled out the new mortgage application form without the language preference question and housing counseling information sections, but the implementation date was delayed to Nov. 1, 2020 to allow the industry to have time to prepare.
But now, with the industry focusing on dealing with the impact of the coronavirus, the GSEs are delaying the URLA again.
Under the new implementation timeline, after a period of testing, lenders may begin using the new URLA form on Jan. 1, 2021. From that date through March 1, 2021, use of the new URLA form is optional.
But after March 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 March 1, the GSEs will allow those to process, as long as the lender notifies the agencies “as soon as possible.”
Source :Housing wire