Limited English
Proficiency Borrowers
Perhaps the most unique area discussed by the Bureau in the
2016 final rule, surrounds protections for borrowers with limited
English proficiency (LEP). As the Bureau explained, it received
numerous comments from consumer advocacy groups requesting that the Bureau enact requirements to ensure that mortgage
servicers provide adequate language access for, and communicate effectively with, LEP borrowers. These consumer advocacy
groups suggested that the existing regulatory framework does not
adequately protect borrowers who do not speak fluent English.
In support of this contention, the consumer advocacy groups
stated that mortgage servicers generally:
■ ■ ■ Do not provide written correspondence in the borrower’s preferred non-English language;
■ ■ ■ Do not provide adequate translation services for verbal conversations about the mortgage loan; and
■ ■ ■ Refuse to accept government documents in languages other
than English.
The Bureau‘s attention to this topic highlights their concern
that consumers may not fully understand the terms and ongoing
nature of their relationship. This is not
a new topic to consider, but it should
renew efforts to find a viable solution
that remains rather elusive.
Although the Bureau ultimately
declined to include requirements spe-
cific to LEP borrowers in the 2016
amendments to the mortgage servic-
ing rules, the Bureau did acknowledge
in the preamble to the final rule that it
takes seriously the concerns that were
raised in the consumer advocates’
comments. The Bureau emphasized
that it “believes that LEP consumers
should be served fairly, equitably, and
in a nondiscriminatory manner,” and
that “servicers should communicate
with borrowers clearly, including in
the consumer’s preferred language,
where possible, and especially when
lenders advertise in the consumer’s
preferred language.” The Bureau reaffirmed its commitment to
protecting vulnerable classes of consumers, and encouraged banks
and mortgage servicers to comply with any existing relevant
obligations, including more restrictive state laws. Despite these
statements, the Bureau declined to adopt new regulatory require-
ments specific to LEP borrowers but made it very clear that it
will continue monitor how LEP borrowers are treated and “will
consider further requirements on servicer communications with
LEP consumers in the mortgage servicing context, if appropriate.”
The good news for mortgage servicers is that the Bureau
declined to adopt brand new requirements specific to commu-
nicating with LEP borrowers. However, banks and mortgage
servicers would be well advised to assess their current policies
and practices related to providing language access for, and com-
municating with, borrowers who are not fluent in English. Taking
reasonable steps now to accommodate this class of consumer may
help stave off future scrutiny by the Bureau. The statements made
by the Bureau in the preamble to the 2016 amendments (www.
gpo.gov/fdsys/pkg/FR-2016-10-19/pdf/2016-18901.pdf ) as well
as supervisory instructions in the Bureau’s mortgage servicing
examination manual ( https://s3.amazonaws.com/files.consumer-
finance.gov/f/documents/11.5_Mortgage_Servicing_Exam_Pro-
cedures_June_2016.pdf), provide a starting point for this type
of an assessment. The goal is to ensure that LEP borrowers are
afforded adequate methods for receiving and understanding
verbal and written communications.
Successors in Interest—
Prompt Confirmation
Arguably the most challenging aspect of the 2016 mortgage servic-
ing rule amendments relates to successors in interest. The 2016
final rule includes entirely new protections and procedures for
banks and mortgage servicers who interact with someone who
might be a borrower’s successor. It includes relatively specific and
detailed procedural requirements for validating and confirming
that someone is a successor in interest;
then it extends all new and existing
mortgage servicing obligations to a
confirmed successor in interest.
When a servicer is working with
a potential successor in interest to
obtain information and/or documen-
tation that can validate the person’s
identity and ownership interest in a
borrower’s property, the Bureau has
developed a framework that relies
upon some level of back-and-forth
between the servicer and the potential
successor. Initially, when a servicer
has reason to believe that someone
may be a successor in interest to a
borrower, the servicer must promptly
identify the information, and the doc-
umentation it reasonably requires of
that individual, and provide the po-
tential successor with those require-
ments. This information should be proactively identified so the
servicer is prepared for the first instance rather than having to
react after a request. Ultimately, once the servicer has received
all of the information it reasonably requires of the potential suc-
cessor, the law specifies that the servicer must “promptly make
a confirmation determination and promptly notify the person”
of its decision as to whether or not the individual is a successor
in interest.
Unfortunately, the rule does not prescribe a set number of days
in which the various obligations must be met. A servicer has to:
1. Evaluate information;
2. Make a determination regarding the potential successor’s
status; and
3. Notify the potential successor of its decision.
The implementation phase
is still in full swing for the
portions of the new rules
that will become effective
in April 2018. Banks
and mortgage servicers
must continually ensure
that their operations are
aligned with the Bureau’s
expectations.
