The freshly overhauled application for government-related home financing, which became mandatory this past Monday, added another 30 to 60 minutes to the process this week, brokers and lenders said.
The new form roughly doubles the amount of data fields borrowers must fill out and tends to increase the workload for co-borrowers who are unmarried. Each may have to fill out a separate application as defined by nuances in state laws governing privacy and joint rights.
The additional time the new government-sponsored enterprise application requires could be an important consideration for mortgage lenders aiming to
“My first one took an additional 45 minutes to an hour. I can see in the future this taking another 20-30 minutes,” said Mark Favaloro, president of the New York Association of Mortgage Brokers and the owner of a brokerage called Aamtrust. “It would’ve been better if they’d waited to do this. This is our busiest buying season on top of the pandemic and everything else.”
The need to fill out multiple forms for some co-borrowers is a particular concern because it occurs relatively frequently, Favoloro said, estimating that roughly one out of every three applications he helps to field might fall into this category.
Brokers have a particularly complex transition to undertake with the new Uniform Residential Loan Application because they match borrowers with a range of lenders, all of which may have disparate systems.
While the timing may be challenging, most lenders and vendors said advance notice of the deadline allowed them to meet it.
“Plaza began communicating with our broker clients early in the process, starting Dec. 18. In addition, we held several training sessions so they’d know what to expect,” said Deborah Robertson, regional vice president of sales at Plaza Home Mortgage Inc., in an email.
However, it was tough to avoid procedural delays given the increase in the numbers and types of data fields, said Denise Panza, a senior mortgage banker at Total Mortgage. Because the information is so voluminous, there’s a lot that has to be explained to borrowers and double-checked on the backend, she added.
“My company did roll it out early online, so that helped,” she said. “You’re spending a lot of time on your applications and double-checking your pre-approvals now to make sure the borrower’s information is accurate and flowed through correctly.”
Many lenders and brokers echoed the need for this, noting that ensuring the change works across systems has been a key part of implementation.
“It's been a successful transition so far because we spent months of prep reviewing current business rules and forms within our loan origination system to determine what updates we needed to make. Our training department familiarized the loan team with the changes, and we coordinated with all third party vendors,” said Tim Spencer, vice president of digital systems at USA Mortgage, in an email.
But there wasn’t much companies could do to address complications involving the new information requested. Changes in a physical form that lenders have grown very used to led to growing pains during implementation as well.
“There are a lot of new dropdowns associated with domestic relationships and a military status. The military status piece might be helpful for VA lending, but if you are still manually taking your applications, it’s frustrating because everything is in a different place,” said Panza.
The old 1003 form has been around so long that it’s become
“This is the second biggest change that mortgage companies have seen in originations in quite some time,” he said. (The last big change involved a disclosure process called
There is at least one efficiency built into the new application. It’s designed to allow the more detailed demographic information in it to match that used in Home Mortgage Disclosure Act forms, according to
That efficiency may materialize in the long-term, but in the short-term there could be challenges associated with the transition, said Don Smith, director of product solutions at LoanLogics, a provider of data extraction, indexing and audit technology and services.
“You are going to have loans that have applications based on the old form, and also applications that were completed using the new form. I think that intersection is going to be where lenders are going to struggle to the extent that they do with the HMDA reporting for 2021,” Smith said.
Most vendors, lenders and brokers interviewed for this article anticipated eventually getting used to the new form, but didn’t think it would happen overnight.
“I guess we’re all going to get used to it at some point,” said Panza.
