Language Access in Mortgage Banking

Serving the needs of Limited English Proficiency (LEP) consumers is a growing priority for key mortgage industry regulators-including the Consumer Financial Protection Bureau (CFPB), the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA). At the same time, lenders and servicers aspire to reach and effectively provide their services to the widest array of borrowers. However, providing comprehensive foreign language services to LEP consumers presents legal and operational challenges. MBA is facilitating dialog with consumer advocacy groups and actively engaging with regulators to ensure that any requirements in this area are well conceived and workable.

Overview:

  • LEP individuals are those who do not speak English as their primary language or have a limited ability to read, speak, write or understand English. The definition also includes individuals with sensory impairments, who are deaf or hard of hearing, or are blind or have visual impairments.
  • Census data shows that nearly 9 percent of the United States population has limited English proficiency. Approximately 16,350,000 (or 65 percent) of these individuals speak Spanish, while 1,660,000 (7 percent) speak Chinese, 850,000 (3 percent) speak Vietnamese, 620,000 (2 percent) speak Korean, and 530,000 (2 percent) speak Tagalog. Housing decisions that are based on LEP may have a greater impact on these and other groups because of their nationality.
  • Many lenders and servicers use call-in translation services and housing counseling services to assist LEP consumers.
  • Where translation resources are limited, many homeowners rely on non-expert family members or friends to translate and interpret when communicating with lenders or servicers.

Impact:

  • Government expectations in serving LEP borrowers are not clear in an area where there are several legal and practical considerations, including the following:  
    • The Fair Housing Act prohibits both intentional housing discrimination and housing practices that have an unjustified discriminatory effect. People with limited English proficiency are not a protected class under the Fair Housing Act. Nevertheless, the Act prohibits discrimination on seven protected bases, including national origin.
    • Unfair, Deceptive, or Abusive Acts and Practices (UDAAP) claims are possible where a borrower enters the process in his or her language with a bilingual mortgage loan originator, and then is confronted with documents in English simply because a myriad of translations are not available.
    • While lenders may employ interpretive and translation services, there are profound questions about who is liable for misinterpretations or faulty explanations. While it is clear that Fannie Mae and Freddie Mac (the GSEs) and the government could and likely should provide translations in several languages, it is unclear when and to what extent they will do so.
    • It is also unclear what materials concerning the loan process also should be made available and who should prepare them.
    • Notwithstanding unclear regulatory guidance, examiners may scrutinize a company's policies and procedures related to LEP borrowers.
    • It is also unclear how any requirement may impact the sale of servicing rights or the secondary market.

 MBA's Position / Next Steps:

  • MBA will engage members to determine what resources are currently useful and identify legal, policy and operational questions related to language access in both loan origination and servicing.
  • MBA will continue an ongoing dialogue with regulators and other stakeholders to better understand their emerging goals and priorities-and work on solutions.  
  • MBA will advocate before regulators that any requirements issued must be clear and workable to help serve LEP borrowers.  
  • MBA will provide webinars and training to members regarding current and future LEP requirements.  

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