In February, we reminded our readers that 3/1/2021 was the cutoff for transitioning to the new Uniformed Residential Loan Application (URLA) format. Since then, applicants for government-related mortgages have started using the vastly redesigned URLA form (a.k.a. Fannie Mae’s Form 1003 or Freddie Mac’s Form 65). Meanwhile, lenders have begun to use the new systems designed to process these applications.
As with any major change to an existing process, there has been friction in the early stages of this transition, causing loan origination processes to take longer than with the previous required format. The previous URLA format had become industry standard, while the new format has significantly increased data requirements and will require both mortgage applicants and lenders some time to get used to.
Jerry Koors, president of Merchants Mortgage, noted that “this is the second biggest change that mortgage companies have seen in originations in quite some time.” The last one was the implementation of the TRID disclosure process (required since 2015) aimed at transparency of closing cost early in the loans process. (National Mortgage News).
Here are the factors reported by National Mortgage News, that are contributing to an increase in the time it takes to process a loan using the new URLA.
The new URLA increased the number and type of required data fields by roughly 2x
And co-borrowers who are unmarried may also have to file separate applications
Brokers also have a complex transition to process the new URLA because of all the disparate lender systems with which they transact.
Denise Panza, a senior mortgage banker at Total Mortgage noted, “because the information is so voluminous, there’s a lot that has to be explained to borrowers and double-checked on the backend.” (National Mortgage News)
There is an additional layer of frustration because the seasonality of home sales is just starting to pick up. According to the National Association of Realtors, sales start to rebound (increasing by 34%) from the winter lull between February and March, and peak in June. Changes such as a the new URLA can lead to data quality issues especially during the early transition.
Does your organization have the capability to ensure that the new set of mortgage application data is accurate? Do you have an automated process to apply business rules across all data sets so that your staff can focus on processing the applications instead of “double-checking” data manually? BaseCap Analytics can help.
We help our clients stay on top of their data requirements whether it is to comply with regulatory reporting mandates, or to address mortgage data quality issues. In 2020, we helped a major mortgage investment firm double its revenue, improving its data quality framework and automating their data governance controls with our Data Quality Manager.
Contact us to see how we can help with your data issues and get a demo of the Data Quality Manager.