Language Access in Mortgage Banking

Language access 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). MBA is working with regulators to ensure that regulations in this area are workable to serve the needs of limited English proficiency (LEP) borrowers. MBA will also assist in familiarizing lenders with applicable laws and regulations, both state and federal.

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 show that nearly 9 percent of the U.S. population is limited in 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 documents or interpret when communicating with lenders or servicers.  
  • Anecdotal evidence from consumer advocates suggests that many LEP borrowers have difficulties accessing loan account information and seeking loss mitigation assistance. These borrowers are said to be at higher risk of taking on a mortgage loan without understanding key terms.  

Impact:

  • 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. However, the Act prohibits discrimination on seven protected bases, including national origin.
  • Because of the close nexus between limited English proficiency and national origin, the distinctions between intent and effects claims involving LEP and national origin are often subtle and can be difficult to discern.
  • Lenders and servicers should expect that examiners will more closely scrutinize a company's policies and procedures related to LEP borrowers.
  • Lenders will need to devote the resources necessary to make sure that existing policies and procedures comply with existing state and federal laws and regulations. They will also need to review their own lending data and policies to ensure that they have a process to be able to serve LEP borrowers, to minimize any need to turn away borrowers who might require additional assistance, and to minimize any misperception of discrimination based on language, and by proxy national origin.

 MBA's Position / Next Steps:

  • MBA will advocate that regulators issue clear, workable guidance and-where necessary-rules that provide reasonable standards to help serve LEP borrowers. 
  • MBA will engage members to determine what resources are already available and in use to help facilitate communication between mortgage lenders, servicers, and borrowers about what additional resources are needed.  
  • MBA also will engage members to identify legal, policy, and operational questions related to language access in both loan origination and servicing.
  • MBA will continue the dialogue with regulators and consumers advocates to better understand emerging goals and priorities related to language access, and communicate those goals to members.  
  • MBA will train members in current and future LEP requirements.    

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