Financial institutions should consider creating a centralized
resource for language services and developing a consistent internal policy related to non-English speaking borrowers. This
may require contracting with vendors that provide foreign
language services for languages other than Spanish. As part
of the Language Access Multi-Year Plan, FHFA, Fannie Mae,
and Freddie Mac recently launched an online resource called
“Mortgage Translations” ( www.fhfa.gov/Media/PublicAffairs/
Pages/Mortgage-Translations-Clearinghouse-Launched-to-Help-Borrowers-with-English-Language-Barriers.aspx). The Mortgage
Translations website provides certain mortgage documents and
educational materials in English and Spanish and will add support for Chinese, Vietnamese, Korean, and Tagalog in the future.
Financial institutions should also keep detailed documentation
of contact and communication efforts, particularly when English
is not the borrower’s primary language or when the borrower asks
to communicate in another language. Thorough recordkeeping
can be an effective defense against litigation or regulatory enforcement. Servicers should review and update their loan transfer
requirements to ensure that they receive information on known
language preferences from a previous servicer.
So far, enforcement actions for violations of state language requirements have been rare. Even in situations where the state is
imposing a requirement, state regulators have acknowledged the
difficulty of perfect compliance and have generally acknowledged
the good-faith efforts of financial institutions.
At the federal level, enforcement actions can take different
forms. For example, actions can be brought for LEP discrimination
as ECOA or FHA violations, such as when LEP borrowers are
excluded from certain offers; or when LEP borrowers are subject to
discriminatory terms and conditions. UDAAP violations are also
possible if a bank leads a customer to believe that it will provide
documents in a foreign language and then does not follow through
or misrepresents the terms of the loan. 7 This is particularly true
when products are marketed in a customer’s primary language,
but the customer is then required to sign documents in English.
Failure to provide translations and LEP services could increas-
ingly result in enforcement actions, fines, and potential class-action
lawsuits. This should be an area of greater concern in light of the
new preferred language question on the redesigned URLA, as it
will document a borrower’s preferred language at the beginning
of the loan lifecycle. In states where lenders and servicers must
provide translations when they know or are aware that the bor-
rower communicates in a language other than English, a borrower’s
response to this question could potentially be used as evidence of
that knowledge or awareness. Even if the GSEs do not make ad-
ditional requirements based on this question, other governmental
entities and the courts may take a different view. ■
ABOUT THE AUTHOR
MARIA MOSKVER, J.D., is Chief Legal and Compliance Officer for
Cloudvirga, a company which provides point-of-sale engines that
automate back office operations and increase business insight in
the trillion dollar home loan market.
Maria has more than 20 years of experience in the consumer
financial services industry, both as a practicing attorney and
chief compliance officer, and she most recently served as General
Counsel and Enterprise Compliance Officer for Covius. Maria
has also served as co-chair of the ALFN Collections Group; the
State Government Affairs Committee of AFSA; the Legal Issues
Committee of the CMBA, the Publications Committee of the USFN;
and the State Legislative and Regulatory Committee of the MBA.
In 2018, she was named one of Housing Wire Magazine’s Women
of Influence. Moskver graduated magna cum laude from Colorado
College with a degree in Economics and holds an MBA from the
University of Denver Daniels College of Business. She received her
Juris Doctor from the University of Denver Sturm College of Law.
2 LEP borrowers are those who have a limited ability or no ability to read,
speak, write, or understand English. Preferred language (“PL”) borrowers are
those who are able to read, speak, write, and understand English, but who
prefer to communicate in a language other than English. For the purposes
of this piece, we are referring only to LEP borrowers, but the policies for
LEP borrowers are generally acknowledged to benefit PL borrowers as well.
3 The Pennsylvania Act 91 Notice is required to be provided in English
and Spanish. In April 2016, the Pennsylvania Housing Finance Agency
(“PHFA”) provided translations in four other languages. According to the
PHFA’s guidance issued with these changes, lenders are encouraged to send
an alternative language notice when the lender is aware that the customer
is likely to communicate in the alternative language.
4 As of December 20th, 2016, the New York 90-Day Pre-Foreclosure Notice
is required to be provided in one of the six most common non-English
languages if the servicer knows the borrower communicates in one of the
5 Reyes vs. Superior Court, 173 Cal. Rptr. 267 (Cal. Ct. App. 1981). The court
also clarified that this applies not only to original contracts, but also any
subsequent documents that modify the original contract or substantially
change the rights and obligations of the parties.
6 The GSEs have several existing options and requirements in place; Fannie
Mae in particular provides Spanish translations of the crucial origination
documents and requires its servicers to employ multilingual staff or to
make translation services available. The CFPB includes certain questions
regarding an institution’s policies and procedures for servicing loans held
by LEP borrowers in Module IV of its Supervision and Examination
Manual, as well as guidance and checklist items.
7 Three major actions in recent years have highlighted this trend, two of
which resulted in multimillion dollar penalties. The CFPB took action
against a major credit card company in December of 2013 for alleged deceptive acts or practices when a credit card product had been marketed in
Spanish to customers in Puerto Rico, but the callers did not have a uniform
script and all written materials were in English. In June 2014, the CFPB
instituted penalties against a bank that allegedly excluded borrowers who
indicated they preferred to communicate in Spanish or had a mailing address in Puerto Rico from a credit card debt-repayment program it offered.
In a recent federal case, United States v. Home Loan Auditors LLC et al., No.
3:16-cv-04839, the defendants allegedly “exploited” the clients’ LEP status by
proving marketing materials in Spanish and then requiring clients to sign
English-language contracts that often were not translated.
If access to translated documents
is not available, borrowers are generally
willing to work with a lender who
speaks in their preferred language.