MBA, Trade Groups Press FHFA on Limited English Proficiency Issues
The Mortgage Bankers Association and other industry trade groups again urged the Federal Housing Finance Agency to reconsider its proposed question on Limited English Proficiency under the upcoming Universal Residential Loan Application.
MBA, the American Bankers Association, the Consumer Bankers Association and the Housing Policy Council of the Financial Services Roundtable, told FHFA Director Mel Watt that the proposed question would continue to be problematic for mortgage lenders, subjecting lenders to “considerable legal risks” and “operational and customer service challenges.”
“We believe the concerns raised strongly confirm the need for further testing, research and public outreach prior to the inclusion of any language preference question on the URLA,” the letter said. “More importantly, such testing should not delay the development of resources for LEP borrowers and could occur concurrently or in an iterative fashion to improve the materials developed to assist these borrowers.”
The letter expresses the industry’s commitment to serving LEP borrowers and its support of government entities establishing standards and providing resources for better serving such borrowers. But it reiterated “profound” industry concerns that including such a question would result in unrealistic consumer expectations regarding services for those with limited English proficiency.
The letter cited newly released results of URLA testing conducted by Kleimann on both borrower and lender reactions to various forms of a possible URLA question regarding the language preference of the borrower. The testing showed notably, a majority of borrowers indicated that they believed that asking such a question would lead to services being provided in the selected language.
“This expectation is understandable and is exactly why such a question should not be included on the URLA until the necessary resources are developed and/or centralized in an accessible manner,” the letter said.
The results of the Kleimann testing also suggest, from the borrower perspective, there were varying opinions about the usefulness of such a question. Most respondents generally viewed the language preference question positively, noting that it could be helpful in providing assistance to LEP borrowers. Some respondents, however, found it to be unnecessary or unclear. Those borrowers who expressed concerns focused largely on the possibility for their answers to a language preference question to be used in a discriminatory manner, thereby negatively impacting their access to credit. This testing was conducted in July 2016, and further testing on this point may be helpful to understand if borrower attitudes towards a government-mandated collection of language preference information have changed.
“The presence of a language preference question also generated firm borrower expectations regarding the translation services and documents they anticipated receiving from the lender moving forward,” the letter said. “Some borrowers expected that the lender would provide them with a translator or with forms or letters in their preferred language.”
The letter noted at least one state requires accommodations be made for LEP borrowers once a language preference is indicated, and since there are no government-translated forms available, this requirement has proven to be “costly and extremely burdensome.”
The letter also expresses concerns over potential legal liability if communicating in a language other than English or providing a translator, the accuracy of translations provided to borrowers and borrower expectations that lenders are committing to provide certain services. “Any translated forms, including the URLA itself, should come from a more centralized source, such as the Consumer Financial Protection Bureau,” the letter said. “The confusion and lack of clarity revealed by the testing is thus representative of what many borrowers would feel when confronted by this question. To our knowledge, FHFA has not tested the question with limited English proficiency borrowers.”
A more prudent approach, the letter said, would involve wider and more detailed testing of various forms of a language preference question to better identify–and alleviate–concerns of both borrowers and lenders.
“These results make clear that it would be premature and counterproductive to include a question on language preference on the URLA until [further research] is completed,” the letter said. “We therefore respectfully request that FHFA and the Enterprises finalize the redesigned URLA without a language preference question at this time.”
