Understanding the New URLA

The new URLA is bringing us into the 21st century. Along with improving accuracy and the clarity of information being provided by the borrower, the coming changes will make the process more efficient for lenders. As with all changes, there is a learning curve. The key to preparing for a smooth transition is understanding the changes, identifying where they will be on the new forms and beginning testing to eliminate workflow interruptions.

The New Forms and How They Work Together

The Borrower Information Document is the main application form and the first form you will notice with formatting changes. The new layout now has a similar format to the LE and the CD which will make adoption much quicker. This form contains most of the information collected on the current 1003. Generally, one of these forms will be completed per borrower instead of seeing borrower and co-borrower on one application. It is important to note however, that you will see a combination of assets and liabilities for joint borrowers. 

Changes in Section 1

The first change to note is at the top of page 1.  The paragraph referencing joint borrowers has been replaced by a space for the Lender Loan No. / Universal Loan Identifier.  Starting in Section 1, where you would normally see borrower and co-borrower side-by-side, the form will now collect individual data starting with personal information. This is also where the borrower will indicate if they are applying for individual or joint credit.

The next change in this top section is the addition of fields for an email address and cell phone. 

There are two new sections within the personal information section of the Borrower Information Document. 

1. Military Service - This section collects information about Military veterans that can be used by the Veteran's Administration
2. Language Preference - This new section allows the borrower to indicate their preferred language. This informational question does not commit the lender to conduct the loan in the selected language. 

The new Employment and Income section has been improved by including those fields side by side for a more streamlined workflow. This new form supports the collection of loan application details that make it easier for underwriters to verify the income by source. For example: Employment entries include the income received at each employer and calls out other sources of income separately.  Section 1e, Income from Other Sources, is the first part of the form that asks the borrower to select from a provided list

Section 2

Assets And Liabilities

This is where  information from the borrower with regard to their assets and liabilities will be collected.  In sections 2a and 2b, there are fields for collecting bank accounts, retirement, and other accounts.  Similar to the last section, users will now be selecting from the categories that are provided.  For other assets, for example, you would put earnest money, sweat equity or other additional assets that the borrower owns.  Also note that this section includes a does not apply checkbox, and if that were true, this would be selected, and the section would collapse in the dynamic version of the form.

Section 3

Real Estate

In the new Real Estate section the table now includes the existing mortgages associated with each property instead of listing them in a separate Liability Section. Here the borrower will list the real estate that is owned by the property address, including certain detail about the property, such as the property value, whether or not they are going to sell it in this transaction, and whether or not there's any rental income from that property.  Immediately below that, will be a field to list any mortgages that exist on the property. This section, as with other sections in the dynamic version, will repeat as necessary until all real estate is listed.

 Section 4

Loan & Property Information

This is the first place on the form that you will see any actual loan information being entered.

In addition to the three choices in the occupancy field there is now a fourth option added for FHA Secondary Residence.  Underneath occupancy are two new questions referencing mixed-use property and manufactured home.

There are three new sections as part of the Loan and Property Information.

1. 4b allows the borrower to list any other new mortgage loans being taken on the property being bought or refinanced.  If there are no additional loans, the borrower will check the “Does not apply” box and the section will collapse.  If there are additional loans, the borrower will add the creditor name, lien type and position, and amount.
   
   
2. 4c is for rental income on purchase loans. The top line allows the borrower to provide expected gross monthly rental income for purchase loans. The lender then calculates the expected net monthly rent income amount. This section applies when the subject property is a 2-4-unit primary residence or investment property.  
   
   

3. 4d is where the borrower will report any gifts or grants that they will receive to help cover the cost of the loan by selecting from the provided list. The borrower would report the asset type, if the amount has been deposited, the source, using that list above, and then the value. This section will also be dynamic and expand or collapse as needed.

Unmarried Addendum

Important Deadlines for URLA

Beginning July 1, 2019, both Fannie Mae and Freddie Mac will allow the use of the redesigned Uniform Residential Loan Application ("URLA") published jointly by the Government-Sponsored Enterprises ("GSEs").  DocMagic systems will be updated to accommodate these new forms for loans with application dates of July 1, 2019 or later.

How do I learn more?

The new URLA form introduces many changes in the way borrower information is captured and displayed, including bolstering certain areas of the application such as income verification, military service, assets and liabilities, homeowner counseling, and more in depth property information. For a complete overview of the new functionality we have prepared the following resource page and strongly encourage our DocMagic customers to become familiar with the new content and system changes. DocMagic URLA Resource Page

Technology to validate data, assure quality and compliance for all pre-funded home loans

TORRANCE, Calif., Sept. 18, 2018—DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced today that Freddie Mac has implemented its SaaS-based eVault technology and SmartREGISTRY™ platform.

DocMagic’s eVault provides a secure electronic repository for storing documents and performing automated eNote certification to Freddie Mac eMortgage lenders via Loan Selling Advisor®. By automating the eNote certification process, Freddie Mac will speed the funding process, thereby improving liquidity in the mortgage markets and reducing lender’s warehouse line costs.

“Freddie Mac is committed to streamlining the mortgage process for lenders and borrowers, and has been a leader in purchasing eMortgages since 2006,” said Andy Higgenbotham, Freddie Mac’s Single Family Chief Operating Office. “We rolled out our automated certification process in 2015 to speed up the funding process, thereby improving liquidity in the mortgage markets and reducing lender’s warehouse line costs. We are now expanding this process to include the DocMagic platform.”

DocMagic’s eVault provides safe and secure storage for sensitive loan documents. It also automatically parses and validates data in a SmartDoc eNote against data in the user’s core system of record. Additionally, DocMagic’s SmartREGISTRY platform enables holders of eNotes to securely transfer these electronic documents to other eVault systems, such as those used by investors, conduit aggregators and servicers. Ultimately, it facilitates real-time access, delivery, storage and much needed control of electronic loan files.

“Freddie Mac has been a long-time visionary and champion of eMortgages over the years and has made great strides with their unwavering commitment to automation across the supply chain,” stated Dominic Iannitti, president and CEO at DocMagic. “Now, with the successful rollout of SmartDoc eNote data validation prior to funding, this demonstrates the advantages and a clear-cut ROI of going completely ‘e.’ We look forward to ongoing collaboration with Freddie Mac and to further adoption of the digital mortgage process.”

Notable is that that Freddie Mac encourages the use of ‘SMART’ (securable, manageable, archivable, retrievable, transferable) eNotes because static documents do not contain source data, and thus make it difficult, costly and time consuming to confirm the data on documents match.

DocMagic established a process that guides lenders on how to begin using SmartDoc eNotes. The company’s eVault technology is integrated with its Total eClose™ platform, which is a comprehensive eClosing solution that creates a 100 percent paperless digital mortgage process — from origination through eClosing, eWarehouse lending, investor eDelivery and eServicing.

About DocMagic: DocMagic, Inc. is the leading provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions for the mortgage industry. Founded in 1988 and headquartered in Torrance, Calif., DocMagic, Inc. develops software, mobile apps, processes and web-based systems for the production and delivery of compliant loan document packages. The company’s compliance experts and in-house legal staff consistently monitor legal and regulatory changes at both the federal and state levels to ensure accuracy. For more information on DocMagic, visit www.docmagic.com.

Join Tanya Brennan, DocMagic's eService Product Specialist, for a FREE educational webinar.

Learn what you need to know to prepare for the Uniform Closing Dataset (UCD) Requirement before the September 25, 2017 deadline. Our special guests Daniel Miller, Digital Alliance Manager & Sejal Patel, Financial Service Manager from the Single Family Digital Products division at Fannie Mae will be on hand to answer your questions about UCD.

We'll show you DocMagic's GSE-Verified solution — available NOW! Learn how to generate & deliver UCD files directly to Fannie Mae and/or Freddie Mac, satisfy the requirement to provide borrower data (and seller data, if available) in the UCD file format, create UCD files that include an embedded PDF of the Closing Disclosure, and how to integrate via DocMagic's Application Programming Interface (API).

REGISTER NOW

Join us for a Free DocMagic Webinar: Get Prepared for the UCD Requirement! 
July 11th  |  10AM PDT

Join our own Tim Anderson, Director of eServices, along with Kathy Scanlon, Lead Project Manager – UCD / Loan Closing Advisor at Freddie Mac, for a FREE educational webinar! Learn what you need to know to prepare for the Uniform Closing Dataset (UCD) Requirement before the September 25, 2017 deadline.

Find out what you need to know about the UCD requirement and step-by-step instructions for how to: 

• Generate & deliver UCD files, directly to your GSE of choice
• Provide both Borrower and Seller data in UCD file format
• Create a UCD file that includes the PDF representation of the CD
• Integrate via DocMagic's Application Programming Interface (API)

We'll show you DocMagic's GSE-Certified solution — available NOW!

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Industry experts weigh in on recent changes to Fannie Form 1003/Fredie Form 67.

By Patrick Barnard

In the first update for the form in more than 20 years, government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac have redesigned the Uniform Residential Loan Application (URLA – Fannie Form 1003/Freddie Form 67) in order to make it simpler to use and to add new data fields for increased reporting under the Home Mortgage Disclosure Act (HMDA).

The new version includes simplified terminology and a clearer set of instructions for users, according to the GSEs. This, in turn, will help borrowers complete the loan application with less help from the lender. As part of the project, the GSEs worked together to create a common corresponding data set, called the Uniform Loan Application Dataset (ULAD), to ensure consistency of data delivery.

Lenders may begin using the redesigned forms on Jan. 1, 2018; however, as of right now, there is no deadline set for their required use.

The updating of the form is part of the GSEs’ Uniform Mortgage Data Program (UMDP), a larger joint initiative under the direction of the Federal Housing Finance Agency (FHFA), to standardize single-family mortgage data in the U.S.


Although at first glance these updates might not seem like a big deal, they are, in fact, an important step toward standardizing the loan information used for underwriting single-family mortgages. To learn more about how the industry is viewing these changes, MortgageOrb recently interviewed Tim Anderson, director of e-services for DocMagic, a provider of loan document software and services; Mike Vitali, senior vice president and chief compliance officer at LoanLogics, a provider of technology and outsourced audit services; and Annemaria Allen, CEO and president of The Compliance Group, a consultancy that assists lenders with mortgage compliance and quality control (QC).

Q: What is your initial reaction to the changes? Do you feel the changes were necessary? Are there some changes that you feel were more needed than others?

Anderson: These changes were needed. With the new TILA-RESPA Integrated Disclosure (TRID) forms (the loan estimate and the closing disclosure), it’s good to try and standardize them as much as possible to have the same look and feel to them for the consumer. I still wish they would have moved to a full intelligent, or, as some refer to them, SMARTDoc, format so that only the exact terms specific to the loan would be shown. They did incorporate the idea of a “dynamic” document, so if a consumer is filling out the form online, some of it expands or contracts based on some of the loan types and conditions. It should be the same if one is printing and filling it out manually, producing less data and fewer pages that are not relevant.

Vitali: I believe the changes will prove beneficial to both lenders and consumers. The additional information will help lenders make an earlier, more informed decision on borrower qualifications and whether they should proceed with the processing of the loan. They will also be in a better position to explain what additional information may be needed and why. With the increased scrutiny on loan quality and customer service, the need for more comprehensive borrower information became more important. The added data will also provide a more complete picture of the applicant – which may assist lenders and the agencies in making better determinations about risk factors that can lead to borrower defaults.

Allen: Let’s just say that we have been using basically the same URLA for the past 30 years, with very few to moderate changes. So, yes, I feel the current URLA needs a complete update. Times have changed, and laws have changed, so my initial reaction to the changes is that, for the most part, they are good. From a compliance standpoint, of course the HMDA changes are needed. The URLA is the primary form in which we collect all of our data. It tells us the story we need to know about the borrower. The better documented the story is, the faster it speeds up the lending process. I have some concerns with documenting co-borrowers’/joint credit and perhaps some inconsistencies there, but it could be a product of looking at the same form for 30 years and then trying to review this new form to determine how certain aspects apply. Generally, after several months of using the form, it all starts falling into place. I would suspect that there would be a need for an amended version about a year after the form comes out.

Q: Do you feel that the form is “clearer” and will be easier to use, as the FHFA says? Are the instructions clearer?

Anderson: Yes. I like the idea that they separated the borrower information from the lender so there will be less confusion on who fills out what. They also used the same company that designed the TRID documents – and so leveraged some of the consumer feedback they received from that to include in the new URLA. Yes, the instructions are clearer. They used more simplified consumer language than business loan officers (LOs).

Vitali: Definitely. The form is like a road map for originators or consumers who are providing lenders with the information needed to move forward with their loan applications. It will also highlight areas that may need additional research or information.

Allen: There are parts that are definitely clearer, but then there are parts that are more confusing. For example, Sections 3a and 3b were a bit more confusing for me. For example, Section 3 asks the borrower to list all properties owned and what is owed on them, but in Section 3a, it only gives one spot for one address. Then it says, if you are refinancing, list the property you are refinancing first – well, there is only one spot, so it doesn’t really matter. Then you go to 3b, which is where you would put any additional property, but again, it only provides one spot for one address. What about the borrower who owns multiple properties? As I looked at it several times, it became clearer, but the flow was a bit awkward. I thought providing the borrower with details for each section was helpful, such as listing income from other sources and the assets section.

Q: What do you think were the main reasons why the FHFA sought to update the form at this time?

Anderson: It is a continuation of the UMDP that started with the mortgage appraisal form and the Uniform Appraisal Dataset and expanding it to other critical documents to ensure more transparency and better loan quality to feed its underwriting and decisioning systems. Fannie and Freddie have announced their new pre-closing QC systems that will eventually replace Loan Prospector and Desktop Underwriter, and it just makes sense if you are collecting more data sooner, lenders can focus on making good loans and spend less time and money on ones they know they cannot approve later.

Vitali: Increased data on loan applicants is a big part of it. Information is king. In the world of “big data,” the more information a company has about its customer, the better it can serve that person and analyze its risks at the same time. The more detailed information gathered on loan applicants the better. Once collected, this information can then be sliced and diced in a variety of ways to gain a much better understanding of consumers, lenders and the potential for risk in future lending.

Q: What segments or positions do you feel will be most impacted by the changes?

Anderson: Obviously, loan origination, but the expanded data requirements will also have a positive effect on better underwriting.

Vitali: Loan originators will be the first ones impacted. The new URLA requires LOs to ask more questions and gather much more detailed information. However, this should help the better LOs make a quicker decision on whether they should pursue the applications or cut bait. Although this will, at first, increase the work and time involved in taking the initial application, in the long run, it will save valuable time for everyone, including the consumer.

Q: Do you anticipate that these changes will require system upgrades? And if so, do you think those changes will be minor or major (disruptive) in nature?

Anderson: Yes, moving to a MISMO 3.4 format. The Uniform Closing Dataset scheduled for the third quarter of next year will be the next big step to get them there. Whether this will be disruptive depends. With TRID, many loan origination systems could not support the new MISMO 3.3 data requirements, so moving from the previous 2x versions to a new 3x standard was a big effort and leap for most. But once they got there, adding the data elements is really not a big task going forward.

Vitali: The layout and information on the new forms will require system upgrades. There is more information, and it’s in a brand new format. That requires changes. Each data point must also be mapped to meet the MISMO coding for the required electronic reporting of all of the data to the agencies. One change that may require some additional programming is the required use of a separate URLA for each applicant when multiple applicants are involved. This will require the capability to gather the information for each on a separate form while combining and aggregating common data and separating other information that is unique to each applicant. However, I believe technology providers can handle these changes, as the information is uniform throughout.

Allen: Yes, system upgrades – in fact, major system upgrades – and yes, disruptive. As I said, the URLA hasn’t changed in years. There are so many components tied within the application that certain changes will affect other areas, and sometimes you don’t even realize they will affect another area until they do. The application is the heart of the loan process, so our industry is literally having a heart transplant. But just like with a heart transplant – does anyone really want one? No, but they have them because the oxygen starts flowing better, the blood starts circulating through the arteries better, and once you heal, you feel amazing. I do feel the URLA needed an overdue update, but with anything in our industry, it’s never easy. Hopefully, with technology becoming more and more ingrained in our industry, change won’t be as difficult down the road. Keep in mind, though, there will always be updates and patches – it’s a work in progress.

Q: Lenders can start using the redesigned URLA on Jan. 1, 2018. A timeline for required use of the redesigned URLA and ULAD will be established at a later date. What will your company be doing to prepare for the use of these forms, and how soon do you expect to get started?

Anderson: As opposed to most doc-prep companies that based their technology on producing dumb PDFs, DocMagic’s system is based on native XML data to generate “intelligent forms.” As one of the largest doc-prep companies in the industry, we were one of the companies they asked to participate in their original testing and rollout to get valuable feedback. So, we will be ready.

Vitali: LoanLogics, a provider of technology and outsourced audit services for lenders, is now in the process of reviewing any changes needed to extract and process the data that will be captured by lenders in the new URLA. This data will be utilized to analyze and audit loans in pre- and post-closing reviews for credit underwriting and compliance. This additional information facilitates a more comprehensive loan review that helps to better identify weaknesses in the process or information gathering that could lead to loan defects or, worse, repurchases or indemnifications. The information gathered and entered into the new URLA is validated and compared with other loan documentation to ensure it is more accurate.

This article originally appeared on the MortgageOrb Blog on September 7, 2016.

Press Release:
Company joins select group of vendors that can use industry standard eNote registry

TORRANCE, Calif., Feb. 17, 2015 -- DocMagic, Inc., the leading provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions for the mortgage industry, announced that the firm has now completed its integration with the MERS® eRegistry, making it one of only a few industry vendors to integrate with the widely used system.

Launched in 2004, the MERS® eRegistry is the legal system of record that identifies the owner or holder (Controller) and custodian (Location) for registered eNotes and provides greater liquidity, transferability and security for lenders, according to MERSCORP Holdings, Inc. It was created in response to demand by the mortgage industry for a system to satisfy certain safe harbor requirements under the Uniform Electronic Transactions Act (UETA) from 1999, and the Electronic Signatures in Global and National Commerce Act (E-SIGN) from 2000.

"The MERS® eRegistry system excels at effectively handling a vital service for eMortgage originations," said Dominic Iannitti, president and CEO of DocMagic. "Fannie Mae and Freddie Mac both require use of the MERS® eRegistry for all eNotes they purchase. DocMagic's integration with MERS' system fulfills the GSEs' requirement and thus allows us to pass the benefits that the service offers along to our customers."

Using an eClosing platform such as DocMagic's eSign platform, the borrower simply signs the eNote, and the lender then immediately and efficiently registers it on the MERS® eRegistry, where it securely resides and can easily be referenced at any time. Thereafter, the lender is able to simply transfer control to investors.

Notable is that DocMagic's recent acquisition of eSignSystems, the mortgage industry's leader in eSign and eVaulting Solutions, also has MERS eRegistry connectivity through its SmartSAFE suite. SmartSAFE facilitates secure eDelivery, eSigning and eRetention with a legal "system of record," providing detailed audit trails from the beginning to the end of transactions.

About DocMagic:
DocMagic, Inc. is a leading provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions for the mortgage industry. Founded in 1988 and headquartered in Torrance, Calif., DocMagic, Inc. develops software, mobile apps, processes and web-based systems for the production and delivery of compliant loan document packages. The company's compliance experts and in-house legal staff constantly monitor legal and regulatory changes at both the federal and state levels to ensure accuracy.

For more information on DocMagic, visit http://www.docmagic.com/.