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CFPB / RegulatoryMortgage

FHFA: GSE servicers must keep fair lending data

The regulator and conservator of the GSEs previously required lenders to furnish language preference data

In a move the Federal Housing Finance Agency said will bolster sustainability and equity, servicers for federally backed loans will obtain and maintain fair lending data.

Starting March 1, 2023, servicers will be required to maintain data on borrowers’ age, race, ethnicity, gender and preferred language. The data will stay with the loan throughout the mortgage term, regardless of whether the servicing rights change hands.

“The need for collection and maintenance of quality fair lending data is a lesson learned from the foreclosure crisis and COVID-19 response,” said FHFA Director Sandra Thompson. “Having fair lending data travel with servicing will help servicers do the important work of providing assistance to borrowers in need, helping to further a sustainable and equitable housing finance system.”

Servicers can implement the change immediately, but are not required to do so until next year.

According to Fannie Mae and Freddie Mac’s updated servicing guides, the data must be in a format that is “queryable.” Servicers transferring the servicing rights must deliver the data to the new servicer. The new servicer is not required to update the data points, but must store it to be able to deliver the data in subsequent transfers.

The policy change does not apply to reverse mortgages, according to Fannie Mae’s guidance for servicers.


What will servicing look like in 2022?

Communication, borrower education and training of consumer-facing staff are all critical elements to ensure your servicing operation is properly prepared to help borrowers as they exit forbearance plans.

Presented by: Selene Finance

The requirement echoes a similar requirement for lenders selling loans to the GSEs. The FHFA said earlier this year that conventional mortgage lenders must collect data on language preference and housing counseling starting in March 2023.

That development prompted concern from legal experts that the information could be used as a basis for fair lending lawsuits. In August 2021, Cadence Bank settled allegations of redlining which stemmed, in part, from the bank’s loan officers’ lack of Spanish language skills.

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