FHFA seeks to improve access to credit for borrowers with limited English proficiency

Issues a Request for Input

The Federal Housing Finance Agency issued a Request for Input on issues facing qualified mortgage borrowers with limited English proficiency (LEP) in order gauge how they can better serve them.

According to the FHFA's 2017 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions, Fannie Mae and Freddie Mac are required to identify major obstacles for LEP borrowers in accessing mortgage credit and to analyze potential solutions.

This request for input stated that it seeks to start that process to learn more about the procedures and tools that originators, servicers, and other parties in the mortgage lending process presently employ to assist LEP borrowers.

LEP borrowers are individuals who have a limited ability, or no ability, to read, speak, write, or understand English. And individuals who are able to read, speak, write, and understand English but prefer to communicate in a language other than English are referred to as preferred language or PL borrowers.

The FHFA noted it believes that addressing issues related to LEP borrowers will typically benefit PL borrowers as well.

All input should be submitted by July 10, 2017. From here, the FHFA aims to develop a multi-year plan appropriate for the enterprises to support improved access.

And while the FHFA added that the enterprises, mortgage industry participants, and other government agencies have taken meaningful steps to address this issue, it is seeking input on actions the enterprises could take, appropriate to their role as secondary market participants.

Roughly a year ago, a coalition of civil rights groups pressured the Consumer Financial Protection Bureau to enhance protections for mortgage services to potential homeowners who grapple with the English language.

The Americans for Financial Reform, in order to get their way, would need help from the Federal Housing Finance Agency, HUD, and the federal banking agencies in order to make these proposals work.

"As we have previously observed, the expectations of the CFPB and other regulators for serving limited English proficiency customers present numerous challenges for financial institutions, including UDAAP and fair lending risks, and regulators have not yet provided financial institutions with guidance about how to serve LEP consumers without taking such risks," said attorney John Culhane at the time. "We were therefore glad to see that AFR’s recommendations include the CFPB’s provision of affirmative written guidance/regulations."


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