BLOG VIEW: Mortgage regulators mandate that lenders and service providers treat all mortgage borrowers fairly and provide equal access to services regardless of whether the consumer speaks English. As the US continues to emerge from the shadow of the COVID-19 pandemic, borrowers who may have preempted defaults are now facing the end of the forbearance programs. To stay compliant, mortgage service providers need to be prepared to meet the needs of borrowers with limited English proficiency (LEP).
The regulator’s perspective
Regulators and courts are more active in enforcing fairness and equality for LEP consumers who work with their lenders. A comparison between a large statewide mortgage administrator and 48 attorneys general regarding improper servicing allegations required that the administrator improve its practices towards LEP borrowers. The administrator 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 specifically mandating the provision of non-English language services to LEP borrowers during the mortgage service process. Congress has begun drafting a bill setting language translation requirements for mortgage applications and services. However, Congress did not take any action until October 2021.
The Consumer Financial Protection Bureau (CFPB) is using its enforcement powers to promote better voice access for LEP borrowers. The Bureau’s “Statement on the Provision of Financial Products and Services to Consumers with Impaired English” 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 required by Congressional Act or the regulatory mandate of the CFPB, improving language access for LEP borrowers is required in order for mortgage servicers to be compliant. If you haven’t already, service providers should start providing language resources and assistance to LEP borrowers now.
Service providers and lenders should start with Basic Review Module 4 of the Equal Credit Opportunity Act (ECOA): Fair Credit Risks Associated with Mortgage Management. CFPB review teams use five modules to conduct ECOA baseline reviews to assess how the institutions’ compliance management systems identify and manage fair credit risks under the ECOA. The section titled “Service Options for Consumers with Impaired English Proficiency (LEP)” contains these (and other) key questions:
- Does the company offer service options for borrowers with limited English proficiency (LEP)? Are such options offered through live customer service? Translated documents? Please note the languages and service options offered.
- Does the company record and track borrowers’ stated preferences for services in languages other than English? If so, please describe.
- If customer service reps are available for assistance in languages other than English, are they dedicated service reps (as opposed to reps who have different roles but are available for translation when needed)?
Be proactive in sharing language resources
In developing the multi-year plan for voice access, Fannie Mae and Freddie Mac conducted interviews and focus groups with borrowers whose primary language was not English, as well as lenders and service providers. Not surprisingly, LEP borrowers want to use documents that are in their own language. While they value translated documents, LEP borrowers prefer interpreting (personal translation). Being able to speak to knowledgeable people who can explain the complicated mortgage process in their native language is essential to helping LEP borrowers successfully navigate the complicated mortgage process.
In order to better serve LEP borrowers and comply with regulations and guidelines, there are a few guidelines that mortgage service providers should follow:
Know the rules. In times of rapid change, it is particularly important to keep up with new regulatory requirements. Service providers should be familiar with state laws, CFPB guidelines, and any new federal laws regarding voice access for LEP borrowers. Call center representatives should be trained to communicate and work with callers who need help in another language.
Familiarize yourself with the resources available. Many language resources are already available to assist mortgage service providers and their borrowers, and more are likely to be added. When the forbearance ends, service providers must provide information about repayment options and foreclosure prevention in the language preferred by borrowers.
Share language resources with LEP borrowers. Understanding the complicated mortgage process is a challenge for many borrowers – even without a language barrier. On the servicing side, LEP borrowers need to be able to understand escrow (a concept that doesn’t translate well), deferred repayment options, and avoiding foreclosures. Service providers can provide interpreting services and translated documents to help LEP borrowers navigate these processes.
Use the mortgage service software. Mortgage service software can and should play a role in assisting LEP borrowers. Borrowers should use mortgage service software that will at least allow them to specify the borrowers’ preferred language in their software systems. This helps service providers direct borrowers to the right people who can help them quickly and easily. The language preference indicator can also alert customer service or debt collection personnel that a borrower may need translated documents and / or an interpreter.
America’s diversity is increasing every year and minority homeowners are growing rapidly. The National Association of Hispanic Real Estate Professionals reports that between 2020 and 2040, 70% of new homeowners will be Latinos. Mortgage lenders and administrators have a responsibility to provide a high level of support and fairness to all people in their service areas. Lenders and service providers need to 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 service providers can expand their potential customer base while ensuring compliance with new regulations designed to keep home doors open to all.
Anita Bush is Vice President of Mortgage Servicer Product Development at FICS (Financial Industry Computer Systems, Inc.), a mortgage software company specializing in mortgage lending, residential mortgage servicing, and commercial mortgage servicing software for mortgage lenders, housing companies, banks, and lending unions.