Limited English Proficiency

The Bureau of Consumer Financial Protection (the “BCFP”) has published a revised 2018 Glossary of English-Spanish Financial Terms (the “Glossary”). Originally published in 2015, the Glossary is intended to provide “a uniform translation of common financial terms to assist consumers with limited English proficiency (“LEP”).” Using terms compiled from other entities, including the Federal Housing Finance Agency, Department of Housing and Urban Development, Internal Revenue Service, Department of Justice, Federal Deposit Insurance Corporation, Federal Trade Commission, Social Security Administration, Freddie Mac, Fannie Mae, General Services Administration, and National Association of Hispanic Real Estate Professionals, the updated Glossary now contains over 1,500 consumer financial terms translated from English to Spanish.

The expanded Glossary thus continues to be a useful tool for financial institutions conducting Spanish-language translations, but such entities should exercise caution in overreliance on the Glossary, since the definitions may not fit all situations encountered by a creditor, and the BCFP has noted that the Glossary does not constitute “guidance.” (We have previously described the pitfalls of translating U.S. consumer protection concepts to foreign languages without expertise because the concepts may be unfamiliar to, vary by the geographic location of, or otherwise lack meaning to the applicable LEP consumer.) We nevertheless welcome all additional clarity and guidance of this manner that the BCFP might provide to financial institutions seeking to serve LEP consumers.

Although the CFPB’s leadership transition rightfully remains top of mind for many of our readers, we wanted to recap two developments related to serving consumers who are Limited English Proficient (LEP). In the days before Director Cordray’s resignation, the CFPB officially approved Fannie Mae and Freddie Mac’s final redesigned Uniform Residential Loan Application (URLA), which added a question about mortgage applicants’ language preference. The CFPB also released a report entitled “Spotlight on serving limited English proficiency consumers.” The report discusses how financial institutions can support access to financial products and services and promote financial literacy for LEP consumers.

Official approval of URLA under Regulation B

The Federal Housing Finance Agency recently directed Fannie Mae and Freddie Mac to add a question about mortgage applicants’ language preference to the URLA. The CFPB has issued an official approval of the final redesigned URLA under Regulation B of the Equal Credit Opportunity Act. It determined that the use of the URLA will not expose creditors to civil liability under the provisions of Regulation B that limit creditors’ inquiries about applicants’ race, color, religion, national origin, or sex. (Although the notice states that the CFPB focused on national origin in reviewing the language preference question, its technical determination covers these other types of information as well.) You can read about the CFPB’s initial approval of the redesigned URLA in September 2016 here.

Report on serving LEP consumers

The CFPB’s report primarily summarizes five practices for serving LEP consumers based on interviews with representatives from “several” financial institutions of various sizes and trade associations as well as the CFPB’s “broader understanding of the market.”

  1. Assessment of language needs based on Census Bureau demographic data or customer-provided language elections (such as on the URLA) and use of such information to build out capabilities to serve Spanish-speaking consumers or other LEP consumers in an institution’s footprint by, for example, branch hiring or in-language servicing for particular product lines.
  2. A centralized point of contact for internal technical assistance to employees at larger institutions. The point of contact may annually review processes and procedures for using non-English languages; evaluate which areas of business would most benefit from LEP services; develop quality control mechanisms; and establish translation and interpretation policies.
  3. Translation and interpretation systems at larger institutions that help ensure consistency and accuracy, including third-party interpreters. Institutions reported that they translate for meaning (rather than word-for-word), use back-translation (involving taking a translated document and having another party translate it back to English) and use bilingual glossaries.
  4. Human capital investments in foreign language fluency and cultural competency, including through hiring and training. Institutions that rely on contractors for translation services often retain some language experts on staff for quality control purposes.
  5. Interactions with LEP consumers in their preferred language take the form of verbal interpretations via phone and the ability to select a language setting for digital services like ATMs, websites and mobile applications, as well as other communications. Most institutions told the CFPB that their written contracts were available only in English, although some institutions provide translations of certain documents, including monthly statements and privacy notices.

The report also identifies a number of challenges financial institutions face in serving LEP consumers, such as the limited number of certified financial interpreters and translators (particularly for languages other than Spanish), the inconsistent translation of terms across the financial services industry, and preparing written materials at a reading level accessible to the average U.S. adult.

Importantly, the report notes that its purpose is to raise awareness about the issues that LEP consumers face in accessing financial products and services and share information about how financial institutions interact with LEP consumers. The report states that the practices described are not intended to be comprehensive or representative of the industry as a whole, nor does it constitute an endorsement of specific practices by the CFPB. (The CFPB also provided some guidance on serving LEP consumers in its Fall 2016 Supervisory Highlights, which we blogged about here.) Given that the report was issued prior to Director Cordray’s resignation, it remains to be seen how the “new” CFPB will approach issues of financial access and literacy among the LEP population.

The Federal Housing Finance Agency has announced that it has reopened and extended until September 1, 2017 the comment period on its Request for Input on improving language access in mortgage lending and servicing.  The FHFA previously extended the comment period until July 31, 2017.

According to the FHFA, it took this action “to allow interested parties more time to consider additional information on issues facing qualified mortgage borrowers with Limited English Proficiency (LEP) throughout the mortgage life cycle process, including mortgage lending and servicing.”

Issued this past May, 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 [LEP] borrowers and the mortgage industry’s ability to serve them throughout the mortgage life cycle.”

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.