1003 URLA Part 2

This feature was introduced with Encompass 19.3. (View the release notes)

This topic describes the process for completing Part 2 of the redesigned Uniform Residential Loan Application (URLA) form that is required for all new loan applications in November 2020. For information about the pre-2020 version of the URLA, refer to 1003 Loan Application - Page 1, 1003 Loan Application - Page 2, 1003 Loan Application - Page 3, or 1003 Loan Application - Page 4.

The 1003 URLA Part 2 input form captures all required borrower income, including employment, self-employment, and other income, enabling the lender to underwrite the loan to GSE guidelines. Section 1b captures current/self-employment. Section 1c captures additional current/self-employment. Section 1d captures previous employment. Section 1e captures income from other sources.

Employment and Income Records

One of the bigger changes with the new URLA involves the way that income and employment records are captured in Encompass. The input forms used for the URLA 2009 version had one set of fields for current employment. The URLA 2020 input forms can capture multiple current employment records. Income details, including details of any associated military pay or entitlements, is included as part of each employment record. All current employment income totals are captured behind the scenes by Encompass and display as read-only fields on forms such as the Transmittal Summary (form 1008) and the FNMA Streamlined 1003.

The first three employment and income sections on the 1003 URLA Part 2 (section 1b, 1c, and 1d) are tied to entries in the Verification of Employment input form. Click the Show All VOE button at the top of each section to open the Verification of Employment input form in a pop-up window to create a new Verification of Employment record or to view all Verification of Employment records. The last section on the 1003 URLA Part 2 (section 1e) is tied to the Verification of Other Income input form. All of the records entered in the Verification of Employment and Verification of Other Income input forms will print on the URLA 2020 output form. All employment income identified as Current will be summed and included in the existing aggregate income fields.

Current and Additional Employment

Sections 1b and 1c capture employment and income that currently applies to the borrower and co-borrower. This information is used to populate the sections 1b and 1c on the URLA 2020 output form. If more than two current employment records are entered for any borrower), the output form will expand to show the additional entries (i.e. will add 1d, 1e as necessary for a third and fourth employer).

Section 1b. Current/Self Employment and Income

This section includes the first entry in the Verification of Employment (VOE) input form marked as Current for the borrower or co-borrower. If there is no Current VOE entry for the borrower or co-borrower, section 1b is blank. The Does Not Apply checkbox is cleared by default and must be manually selected to exclude the record from the output form for a borrower or co-borrower. If data is entered in this section prior to selecting the Does Not Apply checkbox, the data is retained, but the section will not print on the URLA 2020 output form.

Pop-Up Window for Base Pay

In the Gross Monthly Income section, click the Edit icon next to the Base income fields for the borrower and co-borrower to open a Calculate Base Income pop-up window to calculate the monthly income based on the payment frequency. The pop-up is also accessible from the VOE. This calculator allows the loan officer to calculate the monthly income amount for the borrower if they are paid on a different frequency.

Military Entitlements Field and Pop-Up Window

Military entitlements are captured as part of the Verification of Employment input form. Click the Edit icon next to the fields to open a Calculate Military Entitlements pop-up window that enables detailed entry of military pay information. The pop-up is also accessible from the VOE input form. The pop-up window enables lenders to enter various individual military pay and allowance amounts from the borrower’s pay statement. These amounts are then populated correctly to the Base, Military Entitlement, Other, and Total amounts on the Gross Monthly income section on the 1003 URLA Part 2 input form.

Self Employed Borrowers

For a borrower who is self-employed or a business owner, the self-employed income amount is captured along with information about the borrower’s business. The underwriter conducts a self-employment income analysis and documents the amount in the Base income amount in the VOE associated with the self-employment. If additional records exist, they are documented in separate entries.

Section 1c. Additional/Self Employment and Income

Section 1c displays the second record in the VOE that is marked as Current for the borrower or co-borrower. When there is no second current VOE for the borrower or co-borrower, this section is blank. The Does Not Apply checkbox is cleared by default and must be manually selected if you want to exclude the record from the output form for a borrower or co-borrower. If data is entered in this section prior to selecting the Does Not Apply checkbox, the data is retained, but the section will not print on the 2020 URLA output form. Click the Show all VOE button to open the VOE in a pop-up window. If there are multiple current VOE for the borrower or co-borrower, section 1c will repeat on the printed (or electronically generated) URLA to show all the additional records in VOE positions 2-N for the borrower.

Pop-Up Window for Base Pay

Military Entitlements Field and Pop-Up Window

Previous Employment and Income

Section 1d on the input form is used to provide previous employment information if the current employment record does not cover at least two years. This information is printed in section 1d of the URLA 2020 output form. Section 1d on the input form displays the data captured in the first VOE entry that is marked as Prior for the borrower or co-borrower. If there is no prior VOE for the borrower or co-borrower, section 1d is blank. If there are multiple prior VOE for the borrower or co-borrower, section 1d will repeat on the printed (or electronically generated) URLA. Click the Show all VOE button to open the VOE in a pop-up window.

The Does Not Apply checkbox is cleared by default and must be manually selected to exclude the other income records from the URLA 2020 output form for a borrower or co-borrower. When data is entered in a section, the Does Not Apply checkbox is cleared and disabled for the section remains disabled until all data is cleared from the section.

Income from Other Sources

Section 1e. (Income from Other Sources) enables entry of other income sources for the borrower pair, which includes everything not related to employment or rental income, including dividends and interest income. This information is populated to section 1e of the URLA 2020 output form. Click the Show All Other Incomes button to open a pop-up window for the Verification of Other Income (VOOI) input form, where you can create other income records. The first three entries on the VOOI input form display on 1003 URLA Part 2.

The Does Not Apply checkbox is cleared by default and must be manually selected to exclude the other income records from the URLA 2020 output form for a borrower or co-borrower. When the Does Not Apply checkbox is selected, the data entered in this section is retained, but the information will not print on the URLA 2020 output form.

The total Borrower Other Incomes and CoBorrower Other Incomes display on the lower-left. The combined borrower and co-borrower total displays in the Total Other Income Amount on the lower-right. In order for income to be considered in ratios, an owner of the income must be selected (either Borrower or CoBorrower).

Aggregate Income Values