Mortgage

Mortgage functions take longer because of the swap of Fannie and Freddie

The newly revised government home finance application, which became mandatory last Monday, added another 30 to 60 minutes to the process this week, according to brokers and lenders.

The new form roughly doubles the number of data fields borrowers must fill out and tends to increase the workload for unmarried co-borrowers. Each may need to fill out a separate application, defined by nuances in state privacy and common rights laws.

The extra time the new government-sponsored enterprise application takes could be an important consideration for mortgage lenders looking to get purchase loan deadlines under control when purchases begin in the spring.

“My first took another 45 minutes to an hour. I can see this take another 20 to 30 minutes in the future, ”said Mark Favaloro, president of the New York Association of Mortgage Brokers and owner of a broker called Aamtrust. "It would have been better if they had waited for this. This is our busiest shopping season besides the pandemic and everything else."

The need to fill out multiple forms for some co-borrowers is a particular concern because it's relatively common, Favoloro said, estimating that roughly one in three applications he handles could fall into this category.

Brokers are facing a particularly complex transition with the new Unified Home Loan Application, as they match borrowers with a range of lenders who can all have different systems.

While timing can be tricky, most lenders and sellers said that giving notice of the deadline enabled them to meet it.

“Plaza began communicating with our broker clients early on December 18th. We also conducted several training courses so they know what to expect, ”said Deborah Robertson, regional vice president of sales for Plaza Home Mortgage Inc., in an email.

However, it was difficult to avoid procedural delays as the number and type of data fields increased, said Denise Panza, a senior mortgage lender at Total Mortgage. Because the information is so extensive, there is a lot to explain to borrowers and one more review of the backend, she added.

"My company put it online early, that helped," she said. "You spend a lot of time on your applications and now you double-check your pre-approvals to make sure the borrower's information is correct and is being correctly submitted."

Many lenders and brokers reiterated the need, finding that making sure the change worked across systems was an integral part of implementing it.

“So far, the transition has been successful as we've spent months reviewing the current business rules and forms in our lending system to see what updates are needed. Our training department has made the loan team aware of the changes and we have coordinated with all third party providers, ”said Tim Spencer, vice president of digital systems at USA Mortgage, in an email.

However, there wasn't much that companies could do to resolve complications related to the new information requested. Changes in a physical form that lenders have become very accustomed to also resulted in mounting pain during implementation.

“There are many new dropdowns related to domestic relationships and military status. Military status might be helpful for VA lending, but if you're still taking your applications manually it is frustrating as everything is in a different location, ”said Panza.

The old 1003 shape has been around for so long that it has become the industry standard. As a result, the change will need to accommodate the new URLA, said Jerry Koors, president of Merchants Mortgage, a division of Merchants Bank in Indiana.

"This is the second biggest change mortgage companies have seen in their origins in a long time," he said. (The last big change was to a disclosure process called TRID, which is designed to help consumers better understand their closing costs at the beginning of the credit process.)

At least one efficiency is integrated into the new application. According to technology provider Roostify, the more detailed demographic information it contains is intended to be in line with what is used on forms under the Home Mortgage Disclosure Act.

That efficiency may come in the long run, but there could be challenges associated with the transition in the short term, said Don Smith, director of product solutions at LoanLogics, a provider of data extraction and indexing services.

“You will have loans whose applications are based on the old form and applications that were completed using the new form. At this intersection, I think lenders will struggle as much as they do with HMDA reporting for 2021, ”said Smith.

Most of the vendors, lenders, and brokers surveyed for this article expected to get used to the new form at some point, but didn't think it would happen overnight.

"I think we'll all get used to it at some point," said Panza.

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