Redesigned Uniform Residential Loan Application (URLA) and expanded HMDA Information
On September 23, 2016, The Consumer Financial Protection Bureau (CFPB) “officially” approved a new Uniform Residential Loan Application (URLA) also known as the 1003 Loan Application and the 65 Loan Application. The URLA has been redesigned in part to reflect expanded data collection requirements under the Home Mortgage Disclosure Act (HMDA) and Regulation C that take effect on January 1, 2018 (certain provisions will take effect on January 1, 2017). The CFPB’s approval notice addresses the collection of expanded HMDA information about ethnicity and race in 2017.
The government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac led the redesign process along with input from lenders, service providers, government housing agencies and the CFPB. The need for the expanded 2018 HMDA data collection requirements prompted the revision of the government monitoring information section of the application. In addition, a reorganized layout, simplified format and new data fields that capture necessary information were designed in an easy-to-read format to correspond with the Uniform Loan Application Dataset (ULAD) used in conjunction with the 2016 URLA to ensure consistency of data delivery.
Early Compliance Permitted:
The Bureau’s approval of the updated form cited that the revisions to HMDA do not require the collection of disaggregated race and ethnicity until January 1, 2018; however, to ease transition of the process, the Bureau is permitting early compliance with the collection of disaggregated race and ethnicity categories. Early implementation of the new application is not recommended if your financial institution is not subject to HMDA reporting for the 2017 calendar year.
What originators should know about the new 1003 Loan Application?
- Lenders “will have the option” to begin using the new URLA from January 1, 2017 through December 31, 2017 to allow applicants to self-identify using disaggregated ethnic and racial categories as instructed in appendix B to Regulation C, as amended by the 2015 HMDA final rule. (See, 81 Fed. Reg. 66930, 66931
- The CFPB will be requiring expanded HMDA Demographic data collection as of January 1, 2018. The redesigned URLA includes these additional data fields.
- Safe harbor under the Equal Credit Opportunity (ECOA) and Regulation B.
- Lenders that have not yet transitioned to the redesigned URLA as of January 1, 2018 will be required to use a Demographic Information Addendum to the current URLA. This addendum will replace Section X (Information for Government Monitoring Purposes) on the current URLA (this section will need to be left blank, crossed-out, shaded and/or deleted).
- Flexibility to customize certain fields of the form based on system capabilities and design preferences. (NOTE: field names, descriptions, order of the sections and data fields with the sections may not be altered in any way).
What are the some of the benefits of using the redesigned URLA?
- Meets the CFPB’s HMDA Demographic data collection requirement without the need to incorporate an addendum.
- Consumer-friendly format, easier for borrowers to read and complete with minimal assistance.
- Eliminated data fields that are no longer necessary for underwriting.
- Standard terms and definitions provided to promote common understanding and improve risk assessment.
- Redesigned layout to provide flexibility and support for collection of loan information.
- Enhance data quality in support of current policies and regulations.
- Financial institutions have more time to get comfortable with the new form, before it is required.
Links to forms, related instructions/FAQs, data mapping and HMDA filers are listed below:
- Employee Benefit Plans7
- Fortner Bayens, P.C. Banking Letters29
- General Interest11
- IT Risk Management20
- Loan Review and Asset Management34
- Regulatory Compliance22