It's Just Another Form, Right?
Many people ask me, what is the big deal with the new Uniform Residential Loan Application (URLA), it is just another form, right? The short answer to this question is yes, it is another regulated form with profound repercussions to your business. URLA is a significant form tied to all aspects of the lending process, thus not easy to replace. The massive changes to this document will affect all areas of your business, such as training, workflow, policies, procedures, and technology. Each a critical area to evaluate BEFORE using the new URLA.
If you were not already, you are probably thinking, ‘Ok, so I can see your point that the URLA changes are massive.’ The next question is, What makes the changes so extensive? This answer requires a look at the history of the document and the technology we use today.
The Uniform Mortgage Data Program (UMDP)  states that the URLA (also known as Freddie Mac Form 65 / Fannie Mae Form 1003) is a standardized document used by borrowers to apply for mortgages for more than 40 years. I was surprised when I read this and wanted some confirmation of this statement. I contacted Pat, a friend who has worked in Real Estate Lending for nearly as many years. Her response to my inquiry about the document began with a huff about the name URLA. Pat stated, “We called it ‘The 1003’, no matter what type of loan you were working. During my entire career, a version of this document was required. It has had some changes over the years, but it’s pretty much stayed the same”.
The changes, however, did not evolve with the changing American homebuyer or technology in mind. If you considered in 1993, Loan Officers met with applicants face to face or took the information over the phone to complete the URLA. During these meetings, either the Loan Officer or the borrower wrote the information required on the paper URLA, commonly referred to as the “Upfront Application.” The Upfront Application was delivered to the Loan Processor, who typed the final URLA on a typewriter. (My favorite typewriter was the IBM Selectric with correction. Do you remember this essential tool?) A few years later, the newly emerging Loan Origination System (LOS) allowed the Processors to step away from the typewriter. The Processor would enter the handwritten information into the LOS and print the final URLA. This enhancement made Processors happy, increased efficiency, and saved time. Most shops still completed the upfront application by hand. In the late 90’s Loan Officers began entering the upfront application into the LOS. In the first decade of the 2000’s, borrowers were introduced to the ability to complete applications online.
With this history lesson, consider that most LOS over the years were designed around the URLA, a document that was created many years ago. A static document completed by hand that guided the collection of key data from the borrower for initial credit decision or prequalification. Keeping this in mind, this is where the problem begins to take shape. If technology was built to collect data for the URLA, how will replacing this document affect technology?
The good news is LOS vendors are doing a great job of reconfiguring their systems to accept the dynamic form, new fields, removal of obsolete fields, and manage the data collected during the loan process. This is where your team comes in, and you must be ready to tackle the next steps: assessing all impacted configurations, plug-ins, integrations, evaluating changes to workflow plus policies, amending procedures accordingly, then preparing, planning, and delivering of training. Assessing your company’s version of the current LOS and preparing your staff for the change to this key document is a more significant challenge than it may first appear.
The new URLA is a dynamic form with new fields to complete. It is common for current URLA fields and data to drive several areas of configuration within your LOS - configured specifically for your business. LOS providers are delivering the new form, and they cannot plan for all the configuration and modifications you have made to the LOS. Your company, bank, or credit union must determine the areas that require attention. It is up to you to understand the new URLA and to evaluate what modifications are needed for a seamless transition to the new form.
So how do you address this change in the current state of our market, with COVID-19, record closing months, plus daily activities to run your business? There is no need to worry! We can help! The A&S Elite team is a seasoned group of mortgage professionals who know the industry, technology, and how to prepare your organization for change. We have budget friendly URLA Readiness packages that include an evaluation and provision of a plan to fit your unique business. We can make the necessary changes or coach you on what needs to change, train your teams, assist in developing policies and procedures, or provide your company an overall assessment for your LOS. Call me to discuss our solutions or complete the "contact us" form here!
What about DU, LPA & MISMO? That is another blog post, stay tuned for more!