Pub. 4 2016 Issue 3

www.uba.org 6 J ust when banks thought they couldn’t get enough of Regula- tion Z and RESPA, the recent flood of insurance changes and the phase-in over the next two years for changes to the Home Mortgage Disclosure Act, along comes another change from our friends at government-sponsored entities (GSEs) Fannie Mae and Freddie Mac: a new Uniform Residential Loan Application, or URLA, is here! This form, also commonly known as the 1003, is not explic- itly required by federal regulation for mortgage loans, but it is required for any loans that the GSEs purchase and, there- fore, is the form most financial institutions use to originate their mortgages. In a cheerful proclamation on their website, the GSEs state, “The first material updates to the URLA in more than 20 years are the result of extensive collaboration. We worked closely with lenders, technology solution providers, mort- gage insurers, trade associations, housing advocates, borrow- er groups, government housing agencies (FHA, HUD, VA and USDA-RD), the Consumer Financial Protection Bureau and other industry participants.” But don’t rush out and start using this amazing new form just yet! The GSEs themselves won’t even accept the new form until January 2018, and if you’re thinking about using it for your portfolio loans before that time, you should know that there are a lot of important ins and outs to consider be- fore adding the new 1003 to your loan document arsenal. First of all, the good news: The new URLA is a vast im- provement format-wise over its predecessor. From a visual standpoint, it has been extensively market-tested and now clearly separates lender information from applicant infor- mation, making it easier on the eyes of both creditors and borrowers. Its headings, font and boxes appear extremely similar to the Loan Estimate and Closing Disclosure that are currently required under the TILA/RESPA Integrated Disclosures rule, which should give all the loan file documents a more uniform look overall. Moreover, the form is now dynamic, meaning that its length and content will vary depending on the type of loan being applied for. Unnecessary data fields from the old form have been eliminated. Additionally, both electronic and paper copies of the form will be made available and both will be accepted by the GSEs, accommodating technologically savvy and old-school bankers alike. Finally, the new URLA makes it easier to add and remove additional borrowers than before—this should be a major relief especially to smaller community banks, which in using the older form may struggle to prove to examiners that re- quirements like establishing joint intent under Regulation B have been met. There are some points of concern with the new form, howev- er. First of all, the form’s dynamic nature means it’s maybe not as consistent as the prior, more universal URLA—What is true for a refinance URLA may not be so for a purchase loan URLA, which means that identifying the form properly COMPLIANCE CORNER The new URLA is here …with time to spare By James McGuire