It was almost four years ago Fannie Mae and Freddie Mac announced that they are changing the standard mortgage application form for the first time in 20 years, but it will be another 11 months before the mortgage industry is required to use the new uniform home loan application.
Fannie and Freddie announced last week that they are postponing mandatory use of the new URLA until March 1, 2021 due to the impact of the coronavirus on the mortgage business.
Before this change, the use of the new URLA should be mandatory on November 1st, 2020, but this is no longer the case.
This is not the first time the new URLA has been delayed.
Originally, the state-sponsored companies dictated that lenders must use the new loan application from February 1, 2020.
But last year the GSEs delayed the mandatory use of the redesigned URLA at the direction of the Federal Housing Finance Agency.
The move to delay the use of the URLA was made at the direction of the FHFA, which ordered the GSEs to remove the language preference question and housing advice information from the updated URLA form, the standardized form used by borrowers to apply for a mortgage.
The move was welcomed by the mortgage business, the Association of Mortgage Lenderswho claimed that language preference issue can cause more problems than it can solve.
The GSEs later rolled out the new mortgage application form without the language preference sections and housing advice information, but the implementation date was postponed to November 1, 2020 to give the industry time to prepare.
But now that the industry is focused on dealing with the effects of the coronavirus, the GSEs are again delaying the URLA.
According to the new implementation period, lenders will be able to start using the new URLA form from January 1, 2021 after a trial period. From this date until March 1, 2021, the use of the new URLA form is optional.
But after March 1st it will be mandatory to use the new URLA form.
If there are loan applications that started with the old form but have not yet been processed by March 1st, the GSEs will process them as long as the lender notifies the agencies “as soon as possible”.
And from March 1, 2022, the current URLA form will no longer be accepted by the GSEs.
You can find more information about the new URLA timeline here.