The U.S. Department of Housing and Urban Development (HUD) on Monday announced a proposal to shift its Title I home loan programs to the use of the Uniform Residential Loan Application (URLA) that would more closely align them with broader industry standards.
The proposal, now available for review on HUD’s Single Family Drafting Table portal for proposed policies, will be available for comments from industry stakeholders through Dec. 18. Title I loans currently require their own program-specific documentation for both property improvement and manufactured home loans.
This draft policy “proposes to replace these two Title I-specific forms with the industry-standard loan application form, Uniform Residential Loan Application (URLA, Fannie Mae Form 1003/Freddie Mac Form 65), and the new HUD Addendum to the Uniform Residential Loan Application for Title I Loans (form HUD-92900-TI).”
But with an eye toward expanding accessibility for these programs, HUD’s proposal would allow more common industry technology and infrastructure to accommodate these loan 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,” the announcement stated.
This will help to “encourage greater lender participation in the Title I program,” according to the Federal Housing Administration (FHA).
The proposed guidance stems from 2022 requests for information by HUD that sought to “gain insight into barriers with the origination of both small-balance mortgages and Title I Loans.” Many comments on these requests indicated a “lack of parity between Title I and Title II loan requirements in many areas, including the forms required for each program,” according to the proposed Mortgagee Letter (ML).
While the current forms reflect some of the unique characteristics of these loan programs, HUD wants to reevaluate the associated processes to better align them with common industry practices. In addition to moving Title I loans to the URLA, HUD also seeks to introduce an addendum to the URLA to accompany Title I loans, which would maintain recognition of the program’s unique attributes.
The addendum would collect “information similar to [existing forms] for Title II loans and adds Title I specific questions,” the proposed ML reads. “Aligning Title I and Title II requirements by allowing the use of the industry standard URLA form will alleviate the additional burden previously imposed on Title I Lenders to use a program-specific application form.”
Earlier this year, HUD announced that Title I manufactured housing loan limits would be increased. The goal is to align the FHA with market forces and to encourage more lenders to participate in the program.
