Lan­guage Ques­tion Added to the Loan App Against Lenders’ Wishes

National Mortgage News - - Compliance & Regulation - By brad finkel­stein

the fed­eral hous­ing fi­nance Agency added a lan­guage pref­er­ence ques­tion to the loan ap­pli­ca­tion, re­ject­ing the mort­gage in­dus­try’s wishes.

Con­sumers with a lim­ited un­der­stand­ing of English will be able to choose a pre­ferred lan­guage they wish to com­mu­ni­cate in on the mort­gage ap­pli­ca­tion.

How­ever, a dis­clo­sure will state that the mort­gage trans­ac­tion is likely to be con­ducted in English even if an­other lan­guage is cho­sen and that lan­guage’s re­sources may not be avail­able.

When the FHFA re­vised the URLA in Au­gust 2016, it de­cided not to add a lan­guage ques­tion. How­ever, in May it re­vived the idea with a re­quest for pub­lic in­put.

In July, the Mort­gage Bankers As­so­ci­a­tion, along with the Amer­i­can Bankers As­so­ci­a­tion, Con­sumer Bank- ers As­so­ci­a­tion and the Hous­ing Pol­icy Coun­cil of the Fi­nan­cial Ser­vices Round­table sent a joint re­sponse to the FHFA op­pos­ing adding this ques­tion.

The MBA was some­what mol­li­fied by the changes the agency made to the fi­nal ver­sion of the ques­tion.

“The MBA and its mem­bers are com­mit­ted to serv­ing all bor­row­ers in a safe and sus­tain­able man­ner — in­clud­ing those with lim­ited English pro­fi­ciency,” said Pete Mills, the MBA’s se­nior vice pres­i­dent for res­i­den­tial pol­icy and mem­ber en­gage­ment.

“While we con­tinue to have sig­nif­i­cant reser­va­tions about in­clud­ing a lan­guage pref­er­ence ques­tion on the URLA, we ap­pre­ci­ate the mod­est im­prove­ments the FHFA has made in re­sponse to in­dus­try feed­back and con­cerns about the GSEs’ con­sumer test­ing. We are com­mit­ted to work­ing with the FHFA, the en­ter­prises and other gov­ern­ment agen­cies to con­tinue de­vel­op­ing re­sources to aid LEP bor­row­ers.”

Fan­nie Mae and Fred­die Mac will pub­lish a separate dis­clo­sure trans­lated into sev­eral lan­guages that fur­ther in­forms bor­row­ers about the na­ture of avail­able lan­guage re­sources. Use of this dis­clo­sure will be op­tional for lenders, the FHFA said.

The agency “has com­mit­ted to im­prov­ing the abil­ity of all mort­gage-ready bor­row­ers to un­der­stand and par­tic­i­pate fully in the mort­gage process,” said Direc­tor Mel Watt in a press re­lease.

“Adding a pre­ferred lan­guage ques­tion to the Uni­form Res­i­den­tial Loan Ap­pli­ca­tion will en­able mort­gage in­dus­try par­tic­i­pants to con­nect lim­ited English-pro­fi­cient bor­row­ers to avail­able lan­guage ac­cess re­sources. This will sup­port ac­cess to credit for a grow­ing seg­ment of the na­tion’s hous­ing fi­nance mar­ket.”

The new ques­tion will pro­vide the bor­rower with eight choices in­clud­ing six lan­guages: English, Chi­nese, Korean, Span­ish, Ta­ga­log and Viet­namese along with other (fol­lowed by a blank space) and I do not wish to re­spond. Cal­i­for­nia al­ready re­quires a writ­ten trans­la­tion if the ne­go­ti­a­tions for a busi­ness trans­ac­tion (in­clud­ing a mort­gage) are con­ducted in any those lan­guages.

“FHFA made a great de­ci­sion,” said Amanda Jack­son, the or­ga­niz­ing and out­reach man­ager for the Amer­i­cans for Fi­nan­cial Re­form. “Know­ing home­own­ers’ pre­ferred lan­guage will help Fan­nie, Fred­die and mort­gage ser­vicers bet­ter com­mu­ni­cate with their cus­tomers and avoid un­nec­es­sary — and some­times dev­as­tat­ing — con­fu­sion.”

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