Switch to industry-standard forms could save lenders time and money
The Department of Housing and Urban Development (HUD) is working to simplify the loan application process for the Federal Housing Administration’s (FHA) Title I loan programs by introducing a more widely used, industry-standard form.
The FHA recently released a draft proposal to adopt the Uniform Residential Loan Application (URLA) in place of program-specific forms. The proposal is open for public feedback until December 18.
Currently, borrowers applying for Title I loans, used for property improvements and manufactured home purchases, must complete separate application forms: HUD-56001 for property improvements and HUD-56001-MH for manufactured homes.
HUD plans to replace these with the URLA (commonly used in the mortgage industry) and a new addendum specific to Title I loans, called form HUD-92900-TI.
The agency believes this move will streamline the process, allowing lenders to use their existing systems to gather borrower information. This eliminates the need for additional software or manual forms, reducing costs for lenders and encouraging more participation in the Title I programs.
“By replacing the Title I-specific forms with the more commonly used industry standard URLA, HUD seeks to simplify its Title I loan application process, enabling lenders to use existing origination system technology to collect borrower data, which eliminates the financial burden of acquiring multiple software licenses or manually completing a Title I program-specific application form,” HUD said in the draft. “FHA believes these changes will encourage greater lender participation in the Title I program.”
HUD is inviting stakeholders to review the draft proposal on FHA’s Office of Single-Family Housing Drafting Table and provide feedback by the December deadline. The proposed changes are not yet official, and FHA’s current policies remain in place until any updates are finalized.
The proposal followed the release of FHA’s 2024 Annual Report to Congress, which showed strong financial performance for its Mutual Mortgage Insurance Fund (MMI Fund). The fund’s capital ratio reached 11.47% at the end of fiscal year 2024, exceeding the statutory minimum of 2%.
Read more: MBA "remains very concerned" about FHA's mortgage insurance premiums
Despite the fund’s robust standing, the Mortgage Bankers Association (MBA) has raised concerns about mortgage insurance premiums (MIP), which it said may be higher than necessary.
“The Mutual Mortgage Insurance Fund is more than five times the statutory minimum reserve ratio. While it is sensible to have a healthy cushion above the 2% minimum reserve, qualified borrowers should not be charged higher mortgage insurance premiums (MIP) than necessary,” MBA president and CEO Bob Broeksmit said in a statement.
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