Module 2: URLA Form 1003

In a mortgage transaction, pre-qualification is an initial step where a potential borrower provides certain documentation to a lender to assess their eligibility for a mortgage loan. While the specific documents requested may vary based on the lender's requirements and the borrower's circumstances, there are common documents typically requested during the pre-qualification process. The Uniform Residential Loan Application (URLA) and the documents needed to verify the information therein are covered in this module.

URLA: Form 1003 – Section1: Borrower Information

This section asks about the applicant’s personal information.

Context: Identifying the document.

1. Title: Section 1: Borrower Information

Key takeaways: Important information.

1. Borrower name, social security number, date of birth, and citizenship status

2. Type of credit requested

3. Marital status and number of dependents

4. Residence history. The application must cover the last 2 years

Supporting documents:

• Borrower identification

• Social security card

URLA: Form 1003 – Section 1b: Current Employment/Self-Employment and Income & Section 1c. Income from Other Sources

This section asks the applicant about income from employment and other sources, such as retirement, that they want considered to qualify for the loan.

Key takeaways: Important information.

1. Employer name and address

2. Employee title and start date

3. Self-employed checkbox

4. Income breakdown

5. Income from other sources

* The application must cover the last 2 years of employment history.

Supporting documents for employees:

• Written verification of employment

• Pay stubs

• W-2s (as required by AUS)

Supporting documents for self-employed borrowers:

• 1099s (if any)

• Tax returns (as required by AUS)

• Tax transcripts (as required by AUS)

URLA: Form 1003 – Section 2: Financial Information — Assets and Liabilities

This section asks about things applicants own that are worth money and that they want considered to qualify for the loan. It then asks about liabilities (or debts) that are paid each month, such as credit cards, alimony, or other expenses.

Key takeaways: Important information.

1. Assets and other assets/credits breakdown. Read the 1003 for information of what is considered an asset and another asset.

2. Liabilities breakdown. In Encompass, liabilities are imported directly from the credit report.

3. Unpaid balance and payoff checkbox

4. Other liabilities breakdown

Supporting documents for assets:

• Bank statements

• Investment account reports

* Liabilities are supported by the credit report or credit supplements. Other liabilities (§2d) are supported by divorce decrees, mutual agreements, or court orders.

URLA: Form 1003 – Section 3: Financial Information — Real Estate

This section asks the applicant to list all the properties they currently own and what is owed on them. In a refinance transaction, this section should also include the property to be refinanced.

Key takeaways: Important information.

1. Real estate owned (REO) complete address

2. Property value

3. Status

4. Intended occupancy

5. Monthly expenses and income

6. Current mortgage loans on the property

Supporting documents:

• Mortgage statement (if there is a current mortgage on the property)

• Property tax bill (if tax is not escrowed, or there is no mortgage)

• Property insurance (if insurance is not escrowed, or there is no mortgage)

• Homeowner’s association (HOA) statement or borrower letter of explanation (LOE) stating there is no HOA

• Lease agreement and proof of rental income (if the property will be retained, intended occupancy is investment, and the applicant will use rental income)

URLA: Form 1003 – Section 4: Loan and Property Information

This section asks about the loan’s purpose and the property to be purchased or refinanced.

Key takeaways: Important information.

1. Loan amount

2. Loan purpose

3. Subject property address and estimated value

4. Occupancy

5. Additional mortgages on the subject property

6. Rental income on subject property to be purchased

7. Intended gifts to be received by the applicant to aid closing costs

URLA: Form 1003 – Sections 5–9

Section 5: Declarations asks specific questions about the property, the funding to be applied for, and the applicant’s past financial history.

Section 6: Acknowledgements and Agreements tells the applicant about their legal obligations when they sign the application.

Section 7: Military Service asks questions about the applicant (or their deceased spouse’s) military service.

Section 8: Demographic Information asks about the applicant’s ethnicity, sex, and race.

Section 9: Loan Originator Information is to be completed by the Loan Originator (LO).

Key takeaways: All the information on sections 5–9 must be completely filled out.