Fannie Mae and Freddie Mac (the GSEs) redesigned the Uniform Residential Loan Application (URLA) (Fannie Mae Form 1003) and created new automated underwriting system (AUS) specifications (Fannie Mae Desktop Underwriter® [DU®] Spec) to help lenders better capture relevant loan application information and support the industry’s move to digitize the loan origination process.
Here’s what you need to know:
1. March 1, 2021 is the Deadline to Start Using the Redesigned URLA / 1003
Use of the new URLA was permitted beginning January 1, 2021; however, lenders must use the redesigned Form 1003 and DU Spec for all new loan applications received on or after March 1, 2021. Pipeline loans (applications received before 3/1/2021) must use the same formats as initially submitted. Effective March 1, 2022, the old 1003 forms and legacy formats will no longer be accepted.
2. Everything Changed but Nothing Changed
While the look and feel of the Form 1003 changed, the loan application process does not change for lender or borrower. The intended benefits of the redesign are expected to increase “efficiency, transparency, and certainty.” There are now clearer upfront instructions to enable borrower self-service, defined separation of borrower and lender information, new and updated fields to reflect today’s mortgage lending business, obsolete fields have been removed, and the government monitoring information section was updated to align with the new Home Mortgage Disclosure Act (HMDA) requirements.
3. You Don’t Have to Use the Redesigned URLA / Form 1003 for Portfolio (“In-House”) Mortgages
If you’re going to sell, or if you may intend to do so in the future, you should use the redesigned ULRA / Form 1003. However, if you have no intention of selling a mortgage, such as those loans the majority of community banks make “in-house” (referred to as portfolio loans), then you don’t have to use the redesigned URLA / Form 1003. That said, it’s likely the redesigned Form 1003 will become the industry standard even for mortgages not sold into the secondary market.
Resource: Fannie Mae
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