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February 10, 2021

Answers to Persistent URLA Questions

Is your institution ready for the mandatory URLA effective date? Our experts have answers to your lingering URLA questions.

Is your institution ready for the mandatory URLA effective date? Our experts have answers to your lingering URLA questions.

DENVER; Feb. 10, 2021 - One rule of regulatory compliance in the mortgage industry is that you can increase the complexity by an order of magnitude simply by moving back the deadline. Suddenly, what was once difficult, scary, risky and otherwise unwelcome but planned out becomes uncertain. That uncertainty equates to higher risk.

Consequently, as soon as the GSEs moved back the deadline on implementation of the new Uniform Residential Loan Application (URLA) last March, back in the early days of COVID-19, leading lenders started asking questions and adjusting plans.

Many of those questions have now been answered, but we’re still getting a few from the lenders we serve. Here are answers to some persistent questions we’re still hearing.

What if we’re not submitting the new URLA yet?

On January 1, 2021, Fannie Mae and Freddie Mac both began accepting the new URLA from all mortgage lenders. The Open Production Period (OPP) has officially begun. Both large and small lenders participated in the Limited Production Period (LPP) with good results.

But that’s not to say that you are too far behind if you haven’t begun submitting yet.

The good news for Mortgage Cadence clients is that we had clients participating in the LPP and so we know that our LOSs are ready to deliver the information the GSEs are expecting. That should give lenders who haven’t started yet some confidence, but they still need to get their companies moving in this direction.

What are some good steps to get us into motion?

There is a lot of information out there right now to help you get your plans complete and ready to implement, including a number of excellent webinars.

Fannie Mae and Freddie Mac have both produced webinars and Mortgage Cadence hosted a webinar on behalf of the Mortgage Bankers Association. In addition, your technology partners should have produced documents by now that can guide you and help set up internal training teams.

Then, it’s just a matter of testing.

It’s important that every lender test their existing workflow by taking a test loan from application -- from the very beginning of the process -- all the way through to the closing table. There is no other way to ensure that your process will actually collect and deliver all of the data required for URLA.

Finally, report any problems you find to your vendors and technology partners so you can get solutions in place before the final deadline.

I use third party vendors for my LOS, doc prep, and borrower portal, so I shouldn’t need to do anything, right?

Just kidding. We never hear this question from our clients, but we worry that some other lenders might actually be thinking this. Like everything else in this industry, the burden for compliance ultimately comes to rest with the lender.

It falls to the lender to make certain that each vendor they work with has been certified with the GSEs if they are interfacing with the Automated Underwriting System (AUS). If they are, has the system been tested to ensure it works with your specific workflow and product menu?

Find out what testing your vendors have already completed, how they ensure that you don’t fall out of compliance and for any documentation they have prepared for the change. Clear writing is clear thinking, so make sure what they provide you makes sense and answers all of your questions.

Will there be further changes to URLA after the mandate?

There is no indication at this time that there will be any further changes to URLA before it is fully in place and the new standard for everyone. But....

No one can say for sure what the government will decide to do, especially in a year when a new administration is taking control and putting a new person in charge of the industry’s most powerful regulator.

The best we can do is stay informed.

The good news there is that the GSEs continue to be very responsive to industry feedback. We expect them to make adjustments to issues that were found in the Optional Use and Limited Production Period.

To that end, we remain very actively engaged with both Fannie Mae and Freddie Mac. We also participate in the important industry forums. If changes are on the agenda, we’ll let you know. One of the ways we do that is through our webinar series.

Can I change the URLA midstream or use the new doc and the old AUS?

No. The GSEs have set up LPP and OPP for a reason and they expect lenders who sell to them to follow that path. While it’s not clear what risks lenders face if they choose to chart a different path, suffice it to say that they are unnecessary risks.

One of the most serious of these risks is the possible negative impact it can have on your borrowers. Effective change management in our industry must always include a component focused on making the change as easy to understand and comply with as possible for consumers.

Borrowers want a seamless experience that they understand. If they don’t get this level of comfort, they will abandon the transaction and seek out another lender.

It’s been said that there is no such thing as a dumb question, just people without the experience to seek out answers. If you still have questions about URLA, or anything related to the continued success of your mortgage origination business, please call on us. We’d love to discuss them with you.

By Tom Paulett, Principal Product Manager at Mortgage Cadence

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