Limited English Proficiency

The Federal Housing Finance Agency has announced that it has extended until July 31, 2017 the comment period on its Request for Input on improving language access in mortgage lending and servicing.

Issued this past May, the RFI asked for input to be provided by no later than July 10, 2017.  The extension is shorter than the extension of at least 45 days that a group of eight trade associations had requested in a letter sent to the FHFA.

The FHFA has stated that it intends to use the information it receives in response to the RFI to inform “additional steps that could potentially be taken to further support [Limited English Proficiency] borrowers and the mortgage industry’s ability to serve them throughout the mortgage life cycle.”

 

 

A group of eight trade associations has sent a letter to the Federal Housing Finance Agency (FHFA) asking the FHFA to extend by at least 45 days the comment period on the FHFA’s Request for Input (RFI) on improving language access in mortgage lending and servicing.  Issued this past May, the RFI asks for input to be provided by no later than July 10, 2017.

In 2016, the FHFA had considered including a question about borrower language preference in the Uniform Residential Loan Application.  The same eight trade associations that are now seeking an extension of the RFI comment period sent a letter to the FHFA in June 2016 setting forth various compliance and legal concerns raised by the addition of the language preference question.  In the RFI, the FHFA noted that such concerns were raised by the mortgage industry and stated that it “decided not to include the question at that time and, instead, decided to examine [the issue of how to better serve Limited English Proficiency (LEP) borrowers] more broadly.”

The FHFA intends to use the information it receives in response to the RFI to inform “additional steps that could potentially be taken to further support LEP borrowers and the mortgage industry’s ability to serve them throughout the mortgage life cycle.”  The RFI, which focuses on single-family mortgages, contains a series of questions dealing with the following issues:

  • Existing processes and tools to assist potential and qualified LEP borrowers
  • Current barriers that exist for LEP individuals in the mortgage life cycle
  • Potential actions to improve language access in the short term (i.e. actions with an implementation cycle of less than 18 months)  (The FHFA asks for input on eight specific potential measures as well as suggestions for other short-term actions.)
  • Potential actions to improve language access in the long term (i.e. actions with an implementation cycle of more than 18 months), including tracking and collection of data on language preference
  • Legal and regulatory risks of process improvements for LEP borrowers

Serving LEP consumers is one of the most challenging issues facing financial institutions today.  The logistical challenges of ensuring accurate translations, dealing with dialects, and having non-English compliance and monitoring resources have been coupled with a great deal of uncertainty about regulatory risks from serving LEP consumers.  While LEP guidance issued by the CFPB last November was a step in the right direction, further and more specific compliance guidance is needed.

As the trade associations observed in their letter seeking an extension of the RFI comment period, “the importance of [the issue of how to address the challenges of LEP borrowers] is expected to grow over time, as LEP borrowers continue to increase as a share of the overall population of borrowers in the years ahead.”  Given these expected demographic changes and the absence of clear guidance from regulators, financial institutions should review their plans for serving LEP customers with counsel to reduce potential supervisory and enforcement risk.