Anita Bush of FICS: Mortgage Servicers Must Improve Support for Borrowers with Limited English Skills
Anita Bush is VP 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.
Mortgage servicers must provide language resources for borrowers with limited English proficiency. The 2020 Census confirmed what mortgage professionals have experienced over the past decade – America’s diversity increases every year with minority homeownership growing rapidly. The National Association of Hispanic Real Estate Professionals predicts that over the next 20 years, 70 percent of homeownership growth and 53 percent of new household formations will come from Latinos.
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. Accordingly, Fannie Mae and Freddie Mac (the Enterprises) will soon require lenders to include the Supplemental Consumer Information Form in the application process for loans that will be sold to the enterprises. The SCIF collects information about the borrower’s language preference, if any, and any homebuyer education or housing counseling the borrower received, so lenders can better understand borrower needs during the home buying process. Lenders will be required to present the SCIF questions to borrowers and report data collected from the SCIF to the Enterprise purchasing the loan—beginning with loan application dates on or after March 1, 2023. The SCIF will be available via the Mortgage Translations clearinghouse later this summer.
The Regulator’s Perspective
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 May 2022, however, Congress has not taken any additional action on the bill.
In the meantime, the Consumer Financial Protection Bureau (CFPB) and other regulators have been more active in enforcing fairness and equality for LEP borrowers. In May 2022, the CFPB released a report examining metrics from 16 of the largest servicers related to post-COVID responses. The report found that while the CFPB requested language preference and demographic data, the data submitted had too high a level of variance between the different servicers to run comparisons.
However, the report indicated that the number of LEP borrowers whose loans were delinquent without a loss mitigation option after exiting forbearance increased between October and December 2021, while the number of non-LEP borrowers who were delinquent without a loss mitigation option after forbearance decreased during the same period. The CFPB states that this may indicate greater challenges in obtaining in-language information for accessing available loss mitigation options. The CFPB warns servicers that failing to serve LEP borrowers and provide access to in-language information about applicable services could result in Equal Credit Opportunity Act (ECOA) violations.
The CFPB encourages servicers to:
- Ensure that LEP borrowers in need of loss mitigation after exiting forbearance are served in a manner commensurate with services provided to all other borrowers.
- Enhance their data collection and retention of borrowers’ language preference to improve communication and servicing for LEP borrowers and to maximize home retention opportunities for LEP borrowers exiting forbearance.
Servicers should continue to assess and improve their LEP processes, upgrading and enhancing their servicing platform accordingly. Start by answering the questions in The Equal Credit Opportunity Act (ECOA) Baseline Review Module 4: Fair Lending Risks Related to Mortgage Servicing. CFPB examination teams conduct ECOA Baseline Reviews to evaluate how institutions’ compliance management systems identify and manage fair lending risks under ECOA. The Servicing Options for Consumers with Limited English Proficiency (LEP) section 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 their Language Access Multi-Year Plan, the Federal Housing Finance Agency (FHFA) and the Enterprises identified LEP borrowers’ communication preferences during the mortgage process. Interviews with LEP borrowers revealed that they want to use documents written in their own language. While they appreciate translated documents, LEP borrowers prefer interpretation (in person translation) so they can ask questions and get confirmation of understanding. Speaking with knowledgeable people who can explain the complicated mortgage servicing process in their native tongue helps LEP borrowers successfully navigate it. This is especially important in default mitigation, as servicers offer many options and programs to prevent foreclosure.
To provide better service to LEP borrowers and comply with regulations and guidelines, mortgage servicers should:
Know the rules. Servicers should be familiar with the GSE requirements, state laws, CFPB guidelines and any new federal legislation related to language access for LEP borrowers. Servicers will need to implement regular training for call center representatives on how to communicate with and work with LEP borrowers.
Be familiar with available resources.There are many language resources already available to assist mortgage servicers and their borrowers. One valuable online resource is Mortgage Translations, created by FHFA, Fannie Mae, and Freddie Mac to help lenders and servicers better serve LEP borrowers. The site contains documents and educational resources in English, Spanish, traditional Chinese, Vietnamese, Korean, and Tagalog.
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, service staff should be able to explain to LEP borrowers complicated topics such as escrow (a concept that doesn’t translate well), forbearance repayment options and how to avoid foreclosure.
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. This helps servicers direct borrowers to the right staff or pull the correct document translations to better assist them.
The number of LEP borrowers will only increase, and servicers need to plan now how to better serve them. Multi-language support can help servicers increase customer satisfaction (leading to repeat business) while complying with new regulations that ensure fair access to homeownership for borrowers with limited English skills.
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