BY MARIA MOSKVER, J.D.
THE UNITED STATES IS BECOMING MORE DIVERSE IN RACE AND ETHNICITY. According to a June 2018 report from the United States Census Bureau. Hispanic and Asian populations aw the most significant growth in 2017, increasing 2. 1 percent
to 58.9 million and 3. 1 percent to 22. 2 million, respectively. In light of
these evolving demographics and lawmakers’ focus in recent years on fair
lending and making credit accessible to underserved communities, states
are increasingly encouraging—and occasionally requiring—mortgage
lenders and servicers to put forth a good faith effort to communicate with
borrowers in a wide range of preferred languages.
In a statement dated October 20, 2017, the
Federal Housing Finance Agency (FHFA) announced its decision to add a preferred language
question to the redesigned Uniform Residential
Loan Application (URLA). This added question,
which must be included in the URLA beginning in February 2020, asks borrowers about
their preferred language. In addition, the FHFA
has required Fannie Mae and Freddie Mac to
develop a Language Access Multi-Year Plan1 to
improve the mortgage process for limited English
proficiency (LEP) borrowers. 2
With the Consumer Financial Protection
Bureau (CFPB) and other state and federal
regulators focusing more attention to
LEP borrowers, originators and
servicers must ensure that
they are complying with
existing state and federal
requirements and developing a plan to adhere
to future requirements. This should include
documenting their good faith efforts to communicate with LEP borrowers as a safeguard
against enforcement. This article covers
trends regarding preferred language requirements in borrower communications
at the state and federal levels and examines
how these trends may affect the consumer
lending industry now and in the future.
State-Level Trends
States that have implemented foreign language
requirements have taken varied approaches to
the issue, which has made compliance more
difficult for mortgage companies operating
nationally or in multiple states. Unfortunately,
this lack of uniformity is unlikely to change in
the near future due to the individualized nature
of each state’s demographic composition and
foreign language needs. As a result, the industry must continue to follow individual state
trends in order to comply with these shifting
obligations ( www.mba.org/publications/in-
sights/archive/mba-insights-archive/2018/
qanda-with-maria-moskver-of-lenderlive).
Some states provide the required translated
documents and any requirements surrounding
usage. Others place the burden on lenders and
servicers to provide those translated documents
and accompanying services.
Specific Documents
Provided by State Regulators
State statutes do not always provide sufficient
guidance on the use of the translated documents. Particularly in the case of Spanish language documents, lawmakers vary on guidance,
from being silent concerning when the translated
documents should be used to explicitly stating
TRENDS and ANALYSIS
