URLA hits a Covid roadblock, gives lenders more time to prepare

When it comes to implementation of the new Uniform Residential Application (URLA), the mortgage industry is no stranger to setbacks. While Fannie Mae and Freddie Mac announced the rollout of the new application more than four years ago, the initial Feb. 1, 2020 implementation deadline was delayed late last year when the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to make several changes to the form. The new implementation date was then moved to November 1, 2020 to give the industry time to prepare for the updates.

Given the wide-spread impact of the COVID-19 pandemic, the URLA deadline has been delayed again. With many financial institutions still working remotely, the delay provides community banks and credit unions time to adjust to the remote scenarios while also facilitating a record number of refinancing applications. Under the new timeline, lenders may begin using the URLA on an optional basis beginning January 1, 2021. After March 1, the new URLA will become mandatory.

Lender Advantages to Using the URLA

Community banks and credit unions are well aware of the importance of customer centric operations. The new URLA gives their efforts a boost by streamlining the mortgage application process.

Utilizing advancements in technology, the URLA incorporates a dynamic application where questions are adjusted based on the inputs of the loan officer or consumer. The fields have also been redesigned to create a more natural flow, making it easy for consumers to complete the application in less time.

Perhaps one of the most customer-friendly advantages to the URLA is that it is more digitally friendly, allowing consumers to initiate the process on their own time, guided by intuitive prompts throughout the process. The form has also been updated to fit the needs of the modern borrower and lender. Financial institutions can now expect to see a field for email addresses, while obsolete requests have been eliminated.

Also benefitting financial institutions, the application separates individual borrowers, making it easier for multiple home buyers to apply for a shared loan by filling out separate fields. Individuals with joint account information can also apply for financing without the need to duplicate data.

Last, the new URLA includes fields for collecting demographic information required by the January 2018 Home Mortgage Disclosure Act. When using the URLA, lenders will no longer need to use a separate addendum to collect this information, streamlining the process and strengthening compliance.

Now Is the Time to Prepare

The delay of the URLA rollout provides community banks with the advantage of time. However, Finastra invites community banks and credit unions to begin preparing now by getting familiar with the new application. We have rolled the URLA out into a test environment, allowing financial institutions to see how the process works and how it will fit the needs of the organization.  

It is important for community banks and credit unions to get an early start on using the URLA. While the necessary new questions have naturally been integrated into the application, Finastra has also taken the time to improve the lending experience by creating a new user interface to enhance process flow. This includes adjustments to the underwriting integration initiated by Fannie Mae and Freddie Mac.

The test environment provides a buffer of time for loan officers to learn the new workflow, get comfortable with the interface and provide feedback to Finastra. The beta testing is an essential step to ensure the new application is ready to drive increased efficiency for mortgage lenders when the new March deadline comes around.