Fannie Mae, Freddie Mac Postpone URLA

Mike Sorohan msorohan@mba.org

August 09, 2019

Fannie Mae and Freddie Mac yesterday announced a delay to the Feb. 1, 2020 implementation date for the redesigned Uniform Residential Loan Application and automated underwriting system implementations.

The Mortgage Bankers Association welcomed the decision, saying it will work with Fannie Mae, Freddie Mac and the Federal Housing Finance Agency on a new timeline.

In an announcement (https://www.fanniemae.com/content/news/urla-announcement-august-2019.pdf), the government-sponsored enterprises said FHFA directed them to make specific modifications to the URLA form. These modifications include questions regarding language preferences and homeownership education and counseling, which will be removed from the redesigned form and included on a separate form.

The announcement reverses an October 2017 by FHFA to add a preferred language question to the redesigned URLA, despite concerns by MBA and the real estate finance industry. FHFA said the question would enable borrowers who prefer to communicate in a language other than English to identify that language. It also called for clear disclosures that the mortgage transaction is likely to be conducted in English and that language resources might not be available.

MBA and other industry trade groups had urged FHFA to reconsider the proposed question, saying it would be problematic for mortgage lenders, subjecting lenders to "considerable legal risks" and "operational and customer service challenges."

In a Member Letter, MBA President and CEO Bob Broeksmit, CMB, said MBA welcomed the announcement.

"As you recall, MBA opposed the inclusion of the language preference question in the URLA because of the customer relations issues the question would cause if lenders could not actually serve borrowers in their preferred language, and due to unresolved operational and legal questions raised by the language preference information," Broeksmit said. "We greatly appreciate Director Mark Calabria's willingness to revisit these concerns and resolve them effectively. We look forward to working with FHFA to continue to find opportunities to extend homeownership to all creditworthy borrowers."

Broeksmit noted MBA has long advocated for increased resources for borrowers with limited English proficiency and believes that serving this demographic will be one of the biggest market opportunities in the coming decades. "We will continue to work with FHFA to build out the clearinghouse of translated documents and other resources for these borrowers," he said. "Lastly, we will work with the GSEs on the implementation timeline, and welcome your thoughts on any of these issues."

Specifically, the FHFA/GSE announcement noted the following changes to a redesigned URLA form:

--The following questions will be removed from the redesigned URLA form. Instead, a voluntary consumer information form, which will not be part of the URLA form, will be developed to collect this information:

----The Language Preference question (Borrower Information, Section 1a.)

----The Homeownership Education and Housing Counseling question (Lender Loan Information, Section L5.)

----In the Borrower Information, Section 6: Acknowledgments and Agreements, the statement on "Use and Sharing of Information" will be revised to address specific uses of borrower data.

----The Military Service question (Borrower Information, Section 1a.) will be moved to a new section adjacent to Section 7: Demographic Information.

----Minor edits for consistency and usability will be made throughout the URLA form.

A new implementation date has not been announced.

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