Over three years ago Fannie Mae and Freddie mac ad that they were changing the standard mortgage application form for the first time in 20 years. Companies later dictated that lenders would be required to start using the new loan application by February 1, 2020.
But everything has changed earlier this year when government-sponsored companies delayed the mandatory use of the redesigned uniform residential loan application at the management of the Federal Housing Finance Agency.
The implementation of the URLA has been postponed to an unspecified future date, but the GSEs unveiled a new date on Wednesday for the obligation to use the new URLA.
According to the GSEs, lenders will now have to start using the new URLA by November 1, 2020.
The decision to delay the use of the URLA came following a directive from the FHFA, which ordered GSEs to remove the language preference question and housing advice information from the URLA form put in place. to date, which is the standardized form used by borrowers to apply for a mortgage.
This decision was welcomed by the mortgage industry, namely the Mortgage Bankers Association, who argued that the issue of language preference may cause more problems than it solves.
But not all observers agreed with the changes.
In October, a group of nearly 20 prominent Senate Democrats called the FHFA to reverse changes to the URLA, saying the changes could reduce access to credit for mortgage borrowers who are already underserved.
As part of the changes proposed earlier this year by the FHFA, the language preference question and housing advice information are moved to separate voluntary forms.
Despite the protests of the Democrats, the GSE deployed later the new mortgage application form without the language preference question and the information sections on housing advice, as the FHFA had asked them to do.
Now the ESGs are setting a new date for the mandatory use of the newly designed URLA form and establishing a timeline for its implementation.
After a test period, lenders can start using the new URLA form on September 1, 2020. From that date until October 31, 2020, using the new URLA form is optional.
But after November 1, the use of the new URLA form is mandatory.
If there are loan requests that were started on the old form but still not processed on November 1, the GSEs will allow these to process them, provided the lender notifies the agencies “as soon as possible. “.
After November 1, 2021, the current URLA form will no longer be accepted by GSEs.
To read the complete GSE URL implementation schedule, Click here.