BLOG VIEW: Mortgage industry regulators mandate that lenders and servicers must treat all mortgage borrowers fairly and provide equal access to services regardless of the consumer’s ability to speak English proficiently. As the U.S. continues to slowly emerge from the shadow of the COVID-19 pandemic, borrowers who may have forestalled default actions are now facing the end of forbearance programs. To remain compliant, mortgage servicers must be prepared to meet the needs of borrowers with limited English proficiency (LEP).
The Regulator’s Perspective
Regulators and the courts have been more active in enforcing fairness and equality for LEP consumers working with their lenders. A settlement between a large nationwide mortgage servicer and 48 state attorneys general regarding improper servicing allegations required the servicer to improve its practices regarding LEP borrowers. The servicer was required to provide translation services and accept hardship letters and state and federal government forms in foreign languages.
There is currently no federal law that specifically mandates the provision of non-English language services to LEP borrowers during the mortgage servicing process. Congress has begun working on a bill that would establish language translation requirements for mortgage applications and servicing. As of October 2021, however, Congress hasn’t taken any action.
The Consumer Financial Protection Bureau (CFPB) is using its enforcement powers to encourage greater language access for LEP borrowers. The Bureau’s “Statement Regarding the Provision of Financial Products and Services to Consumers with Limited English Proficiency” makes its position clear: “The Bureau encourages financial institutions to better serve LEP consumers while ensuring compliance with relevant Federal, State, and other legal requirements,” including fair lending laws.
Whether it’s required via Congressional law or regulatory mandate from the CFPB, improving language access for LEP borrowers is necessary for mortgage servicers to remain in compliance. If they aren’t already doing so, servicers should start providing language resources and assistance to LEP borrowers now.
Servicers and lenders should start with The Equal Credit Opportunity Act (ECOA) Baseline Review Module 4: Fair Lending Risks Related to Mortgage Servicing. CFPB examination teams use five modules to conduct ECOA Baseline Reviews to evaluate how institutions’ compliance management systems identify and manage fair lending risks under ECOA. The section titled “Servicing Options for consumers with Limited English Proficiency (LEP)” includes these (and other) key questions:
- Does the entity offer servicing options for borrowers with limited English proficiency (LEP)? Are such options offered through live customer service? Through translated documents? Please note the languages offered and servicing options provided.
- Does the entity capture and track borrowers’ indicated preferences to receive services in languages other than English? If so, please describe.
- If customer service personnel are available to provide assistance in languages other than English, are they dedicated customer service personnel (as opposed to personnel who have other roles but are available to translate on an as-needed basis)?
Be Proactive in Sharing Language Resources
While developing the Language Access Multi-Year Plan, Fannie Mae and Freddie Mac conducted interviews and focus groups with borrowers whose primary language wasn’t English, along with lenders and servicers. Not surprisingly, they found that LEP borrowers want to use documents written in their own language. While they appreciate translated documents, LEP borrowers prefer interpretation (in-person translation). Being able to speak with knowledgeable people who can explain the complicated mortgage process in their native tongue is essential to help LEP borrowers successfully navigate the complicated mortgage process.
To provide better service to LEP borrowers and comply with regulations and guidelines, mortgage servicers should follow a few guidelines:
Know the rules. Keeping up with new regulatory requirements is particularly important during times of rapid change. Servicers should be familiar with the state laws, CFPB guidelines and any new federal legislation related to language access for LEP borrowers. Call center representatives should be trained how to communicate with and work with callers who need assistance in another language.
Be familiar with available resources. There are many language resources already available to help mortgage servicers and their borrowers, and more will likely be coming. As forbearance ends, servicers must provide information about repayment options and preventing foreclosure in borrowers’ preferred language.
Share language resources with LEP borrowers. Understanding the complicated mortgage process is challenging for many borrowers—even without a language barrier. On the servicing side, LEP borrowers must be able to understand escrow (a concept that doesn’t translate well), forbearance repayment options and how to avoid foreclosure. Servicers can provide interpretation services and translated documents to help LEP borrowers navigate these processes.
Leverage mortgage servicing software. Mortgage servicing software can and should play a role in assisting LEP borrowers. Servicers should use mortgage servicing software that, at a minimum, allows them to indicate borrowers’ preferred language throughout their software systems. This helps servicers direct borrowers to the right staff who can quickly and easily assist them. The language preference indicator can also alert customer support or collections staff that a borrower may need translated documents and/or an interpreter.
America’s diversity increases every year, and minority homeownership is growing rapidly. The National Association of Hispanic Real Estate Professionals reports that between 2020 and 2040, 70% of new homeowners will be Latino. Mortgage lenders and servicers have a responsibility to serve all people in their service areas with a high level of support and fairness. Lenders and servicers must provide language resources to meet the needs of this growing segment of the real estate market.
By taking steps now to better serve LEP borrowers, lenders and servicers can expand their potential customer base while ensuring compliance with new regulations intended to keep the doors of homeownership open to all.
Anita Bush is vice president of mortgage servicer product development for FICS (Financial Industry Computer Systems Inc.), a mortgage software company specializing in mortgage origination, residential mortgage servicing, and commercial mortgage servicing software for mortgage lenders, housing agencies, banks and credit unions.