April 20th, 2016 5:49 AM by Jackie A. Graves, President
1003 mortgage application form is the industry
standard form used by nearly all mortgage lenders in the United States. This
basic form, or its equivalent, must be completed by a borrower to apply for a
mortgage. While some lenders may use alternative forms or simply accept basic
borrower information about identity, property type and value, the vast majority
of lenders rely on the 1003 form.
the 1003 form is completed twice during a mortgage transaction: once during the
initial application and once at closing to confirm the terms of the loan. Some
lenders allow borrowers to complete the form at home, while others assist
borrowers in person or over the phone. In either case, a potential borrower
should understand the 1003 format and the information required before
completing the form.
1003 loan application form, also called the Uniform Residential Loan
Application, was developed by the Federal National Mortgage Association, or
Fannie Mae, as a standardized form for the industry. Fannie Mae and its
sibling, the Federal Home Loan Mortgage
Corp., or Freddie Mac, are lending enterprises created by Congress
to maintain liquidity in the mortgage market. These entities purchase mortgages
from individual lenders and hold the loans in their own portfolios, or sell the
loans to other entities as part of a mortgage-backed security (MBS). By selling
consumer mortgage debt to these federally backed entities, lenders maintain the
liquidity necessary to continue offering new loans.
need to be documented in the way that Fannie Mae and Freddie Mac dictate. Since both
entities require the use of Form 1003, or Form 65, its Freddie Mac equivalent,
for any mortgage they consider for purchase, it is simpler for lenders to use
the appropriate form at the outset than to try to transfer information from a
proprietary form to a 1003 when it comes time to sell the mortgage.
1003 form includes all the information a mortgage lender needs to determine whether a potential
borrower is worth the risk of the loan. This includes information about the
borrower's identity. While some lenders do not require employment information
to consider a new mortgage, the 1003 form requires up to two years of
employment history to be entered for each borrower. This is used as a means of
establishing the financial security and reliability of the borrower.
The 1003 form also requires a
borrower to disclose the total monthly income for his household, as well as his
regular monthly expenses. In addition to this information, the form requires an
itemized list of the borrower's assets and liabilities to determine whether he is able to
afford monthly mortgage payments. Borrower assets include anything that could be
used or liquidated to cover loan payments, such as checking and savings
accounts; stocks, bonds, mutual funds or other investments; IRA, 401(k) or
similar retirement accounts; and life insurance policies. Lenders need to be
aware of any and all debts for which the borrower may be liable, in addition to
his mortgage payments, such as car loans, credit card debt, student loans or
open collection accounts. If the borrower owns any other property, either as an
investment or second home, the 1003 form requires the disclosure of these
assets and any mortgages that may be tied to them.
By Claire Boyte-White - To view
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