URLA’s Impact on Borrower Trust

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"But that may not be the most significant risk lenders face as URLA’s changes begin to go into effect in a few months. The biggest impact is likely to involve trust issues with mortgage borrowers."

The Uniform Residential Loan Application (URLA) represents a big change for the mortgage industry. In some ways, it will be bigger than TRID.

Whereas TRID, handed down by the CFPB, dealt with statutory timelines and borrower disclosures, largely the purview of doc prep firms, URLA impacts everything. Most importantly, it calls for significant changes to the lender’s database of record. That’s a big deal.

Whenever technology developers need to make changes to the database, it involves rounds of testing and sometimes requires workflow or reporting changes. It’s a big job and development teams that are unprepared will struggle to handle the added workload without issue.

But that may not be the most significant risk lenders face as URLA’s changes begin to go into effect in a few months. The biggest impact is likely to involve trust issues with mortgage borrowers.

For lenders, borrower trust has been a challenge for decades. The transaction just doesn’t happen frequently enough for a relationship to develop. The foreclosure crisis didn’t help. Today, lenders are often lumped together and perceived as a single entity, and every time the newspapers runs a lender, the entire industry is affected.

Now, the government’s desire for even more consumer information is putting the industry in the role of borrower interrogator. Under URLA, loan officers will be tasked with digging deeper into the personal lives of borrowers and asking for sensitive data that extends beyond the current transaction.

How will borrowers feel about being interrogated more thoroughly about their backgrounds? Unprepared lenders run the risk of a poorly trained loan officer rushing in with a clipboard and list of questions, leaving potential borrowers feeling vulnerable and without reprieve. This may lead them to abandoning the application process. Abandoned applications cost your institution money.

The solution? Education. By establishing a relationship with your borrower, providing additional context as to why the information is required, and educating them about the various steps in the mortgage process, you’ll end up with a happier borrower and fewer abandoned applications.

Building borrower trust is a key component of the loan officer’s job, and URLA is likely to make that job even more important than it was in the past.

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