Mortgage industry regulators have made it clear that lenders and service providers must treat mortgage borrowers fairly and provide equal access to financial services, regardless of the consumer’s ability to speak fluent English. As such, they are meant to provide resources to help borrowers with limited English proficiency navigate the complex mortgage process. The government has made it clear to mortgage lenders that all Americans deserve equal access to credit. They even took enforcement action against lenders who violated its fair loan mandates. Now, with the moratoriums on evictions and foreclosures ending and borrowers coming out of COVID-19 forbearance, mortgage officers must be prepared to meet the needs of borrowers with limited English proficiency (LEP).
The regulator’s point of view
In January 2021, the Consumer Financial Protection Bureau (CFPB) published its “Statement regarding the provision of financial products and services to consumers with limited English proficiency”. The Bureau’s position is clear: “The Bureau encourages financial institutions to better serve LEP consumers while ensuring compliance with federal, state and other legal requirements,” including fair loan laws. The statement describes the compliance principles and guidelines that encourage financial institutions to expand access to products and services for LEP consumers. The CFPB said that providing LEP consumer services is integral to full compliance with “the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the equal credit opportunity (ECOA) and other applicable laws. . “
Mortgage agents should improve their practices with LEP borrowers. The Basic Equal Credit Opportunity Law exam modules include module iv: Mortgage Management Risks. Reviewers are encouraged to describe the institution’s policies and procedures for servicing loans held by LEP borrowers, including the following information:
- Does the institution flag files that require assistance in a language other than English? If so, how is it reported?
- Do customer service calls have an option for languages other than English? If so, how are these calls handled?
- Does the institution have customer service available to provide assistance in languages other than English?
A settlement between a large nationwide mortgage manager and 48 state attorneys general over allegations of poor service forced the manager to improve its practices regarding LEP borrowers. The duty officer was required to provide translation services and accept hardship letters and forms from state and federal governments in languages other than English.
Although some states have laws regarding service to LEP borrowers, there is currently no federal law that specifically mandates the provision of non-English language services to LEP borrowers during the mortgage service process. However, that may soon change. In May 2021, Texas Representative Sylvia Garcia introduced a new bill in the House of Representatives. HR 3009, The Improved Access to Languages in Mortgage Services Act, establishes language translation requirements related to residential mortgage applications and services. The bill includes these provisions:
- The Consumer Financial Protection Bureau (CFPB) must create a standard language preference form. Creditors and agents should provide this form to consumers with residential mortgage applications and certain mortgage related notices.
- Upon notice of a consumer’s language preference, creditors and agents must provide (1) oral interpretation services; and (2) translated documents, if available.
- The CFPB and the Federal Housing Finance Agency must publish the translated documents used in the context of a residential mortgage.
If passed, the law will have a significant impact on the operations of principals and service providers. Moved on May 7, it has already been taken out of committee for consideration by the House, but no action was taken in September 2021.
Whether it’s this bill or the next, a federal mandate to improve language access for LEP borrowers is on the horizon. The Biden administration and Congress are focused on efforts to provide additional resources and protections for LEP borrowers. If not already, providers should start providing language resources and assistance to LEP borrowers now.
Best practices for repairers
To provide better customer service to LEP borrowers and comply with regulations and guidelines, mortgage agents should:
- Know the rules. Keeping abreast of new regulatory requirements in times of rapid change is especially important. Duty officers should be familiar with state laws, CFPB guidelines and / or any new federal legislation relating to language access for LEP borrowers. Call center representatives should be trained in how to respond to callers who need help in another language.
- Familiarize yourself with the resources available. There are many language resources already available to help mortgage agents and their borrowers, with more likely to come. At the end of the forbearance, service providers must provide information on repayment options and foreclosure prevention in the borrowers’ preferred language.
- Share language resources with LEP borrowers. Understanding the complex process of a mortgage loan is difficult for many borrowers, even without a language barrier. On the service side, LEP borrowers should be able to understand escrow (a concept that doesn’t translate well), forbearance repayment options, and how to avoid foreclosure, among other service topics. Service agents can provide interpretation services and translated documents to help LEP borrowers navigate these processes.
In developing the Multi-Year Language Access Plan, Fannie Mae and Freddie Mac conducted interviews and focus groups with borrowers whose primary language was not English, as well as with lenders and providers of services, to learn how borrowers and mortgage professionals interact throughout the mortgage process. . Not surprisingly, LEP borrowers want to use documents written in their own language. Although they appreciate translated documents, LEP borrowers prefer interpretation (in-person translation). They want to talk to knowledgeable people who can explain (and make sure they understand) the complex mortgage process and answer their questions.
Mortgage translation clearinghouse. This FHFA website includes many language resources available through CFPB, Fannie Mae and Freddie Mac:
- Borrower Education Materials: Avoid foreclosures, hurricane relief and disaster recovery.
- Glossaries of financial terms: Standardized glossaries are available in five languages: Spanish, Traditional Chinese, Vietnamese, Korean and Tagalog.
- Resources related to COVID-19: Information on forbearance and refund options and a forbearance service script in multiple languages.
- Interpretation services: Live interpretation services and advice in over 200 languages to help LEP borrowers understand the mortgage process, navigate forbearance and prevent CFPB foreclosure. The CFPB website provides consumers with mortgage information in eight languages.
- Fannie Maé: The Fannie Mae website offers translations of important mortgage documents, including mortgage statement, escrow documents, notices of default / entrainment, and a mortgage aid application. It also provides a useful forbearance script.
- Freddie Mac: Freddie Mac provides COVID-19 relief information for homeowners in Spanish and several other languages.
- Housing and urban development: The HUD website includes resources (for example, housing advice and COVID-19 awareness) related to fair housing for LEP people.
Mortgage management software can help
Mortgage management software can and should play a role in assisting LEP borrowers. Agents must use mortgage management software that, at a minimum, allows them to indicate the preferred language of borrowers in their software systems. This helps service agents direct borrowers to the right staff who can help them quickly and easily. The language preference indicator can also alert customer support or collection staff that a borrower may need translated documents and / or an interpreter.
America’s diversity increases every year, and mortgage lenders and service agents have a responsibility to serve all people in their service areas with a high level of support and fairness. By taking action now to think about how best to serve LEP borrowers, lenders and agents can expand their potential customer base while ensuring compliance with new regulations intended to keep the doors to home ownership open to. all.