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The redesigned URLA refines the borrower and lender experience

Written by Steve Hoke Vice President & General Manager, North American Community Markets, Mortgage, Origination and Analytics Solutions
Team of 4 collaborating in office

As demands for a more digital lending process continue to rise, government-sponsored enterprise (GSE) Fannie Mae® along with Freddie Mac and stakeholders across the industry, set another building block in place with the redesigned Uniform Residential Loan Application (URLA/Form 1003).

While the overall loan application process does not change for either lenders or borrowers, the redesigned Form 1003 addresses developments in the industry, GSE policy, and Home Mortgage Disclosure Act (HMDA) reporting requirements — all with a cleaner look and feel and clearer instructions. For lenders, the redesigned form provides more relevant, flexible, and reliable data collection. Likewise, borrowers will find that it is simpler to complete and review, making it easier for them to apply for loans.

Both the Form 1003 and the implementation of new automated underwriting system (AUS) specifications will streamline the application process and improve lender decision-making, redefining the mortgage experience in an era marked by increasing digital adoption. Here is what you can expect as the Form 1003 is rolled out.

Form 1003 set to improve lender and borrower experience

The Form 1003 redesign promises to offer borrowers and lenders some important advantages, including clear upfront instructions to provide consumers with a strong foundation for beginning the process. The application has also been redesigned to eliminate outdated fields and to accommodate modern data, such as email addresses.

The simplified and more intuitive loan application couldn’t come at a better time. According to Finastra’s recent survey of banking customers and lenders, 72% of banks and credit unions receive requests for guidance and advice as consumers tackle the lending process.

The Form 1003 redesign will simplify consumer navigation for completing the form while providing additional information for lenders to underwrite the loan. For one thing, the new application clearly separates fields for borrower and lender information, but Fannie Mae has given digital platform providers the option to organize sections in their systems by real user trends to create a more customized experience. This redesign also allows lenders to more easily capture and relate information about multiple borrowers.

Digital adoption supports gains in lender performance

A recent Forbes Insight survey reveals that 81% of bank or credit union executive respondents are aggressively or very aggressively pursuing mortgage process digitization.i The majority see technology as a true game changer for the industry.

For example, 31% believe that current clear-to-close times will shrink to two weeks thanks to digitization, while 27% see lenders reaching a one-week timeframe with the right digital capabilities.ii 

Of course, consumer experience standards contribute to the move toward digital adoption. In Finastra’s survey, 63% of consumers preferred to apply for a mortgage through a digital channel.

Another driver spurring the digital race is the ever-present concern about risk. 78% of lenders responding to the Forbes Insight survey indicate that they see digital processes and advanced analytics as a way to improve decision making.  

The redesigned Form 1003 acts in step with lenders’ digital transformations. Streamlined dataset collection, for example, makes it easier for lenders to underwrite the loan and obtain greater certainty of execution from Fannie Mae. The supporting loan application submission file based on the AUS specifications supports better integration with digital workflows, allowing mortgage lenders to take advantage of critical advancements in technology designed to reduce both costs and risk.

While digital platform providers will be the biggest driver in ensuring successful integration with the new form and file format, financial institutions will need to ready their systems and processes ahead of the March 1, 2021 deadline. This includes finalizing any necessary changes to current systems, testing technology integrations, and getting ready to implement.

For more tips on how to prepare for the Form 1003 rollout, financial institutions can visit the Fannie Mae lender readiness checklist.

i  ”Digital Mortgages: How Leaders Are Harnessing Tech to Streamline Processes, Cut Costs and Improve Customer Experience.” Forbes Insights. Retrieved from https://sf.freddiemac.com/content/_assets/resources/pdf/other/freddie-mac-future-of-lending.pdf.
ii  Ibid.

Written by
Steve Hoke

Steve Hoke

Vice President & General Manager, North American Community Markets, Mortgage, Origination and Analytics Solutions

Steve leads the product strategy and innovation for Finastra’s Mortgage and Commercial Lending solution sets. With more than 20 years in the financial services industry, Steve brings to his role a wealth of experience in fintech, insurance, lending and investment banking. His broad background allows him to lead a strategic product team focused on improving the lending experience for home buyers and businesses in communities across the country. He is committed to purposeful innovation that...

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