The Federal Housing Finance Agency (FHFA) is soliciting comments on issues faced by mortgage borrowers with Limited English Proficiency (LEP) to support an improved mortgage credit access. This input will be used by the FHFA and the Enterprises, Fannie Mae and Freddie Mac in taking actions addressing the identified challenges facing LEP mortgage borrowers.
Mortgage Borrowers with LEP Challenges
The FHFA has a statutory mandate of providing creditworthy borrowers across all segments access to homeownership opportunities. It does this through the Enterprises and their joint venture, Common Securitization Solutions that serves as the Enterprises’ agent for the issuance of single-family mortgages.
This year’s Scorecard for Fannie, Freddie, and CSS thus require that they identify major hurdles facing LEP borrowers in “accessing mortgage credit, analyze potential solutions, and develop a multi-year plan appropriate for the Enterprises to support improved access.”
Generally speaking, LEP mortgage borrowers face many challenges throughout their mortgage’s life cycle. There is the perceived difficulty in understanding basic mortgage terms, the loan servicer’s communications, and options when they have trouble meeting their mortgage obligations.
It is this language barrier – the mortgage process being in English – that could potentially turn off potential borrowers from applying for a mortgage. Another issue is their heavy reliance on others who are not sufficiently familiar with mortgages themselves.
For their part, mortgage industry participants have their share of challenges when serving LEP mortgage borrowers. “Originators and servicers cite uncertainty about how they can provide services or resources in languages other than English without taking on additional legal risk or incurring regulatory consequences, as well as concerns over the costs of providing these services,” the Agency said.
Notwithstanding these difficulties, mortgage professionals have taken steps to facilitate a better mortgage process for borrowers with difficulty in the English language. These include the use of translated documents, bilingual staff, and language translation vendors.
“… while there are currently resources for LEP borrowers, many borrowers are either unaware of their location or existence. LEP borrowers may be at increased risk of being steered into a predatory loan and in turn, may have difficulty navigating possible loss mitigation options if they fall behind on mortgage payments,” according to the FHFA.
Steps to Improve Language Access
Against this backdrop, the Agency and Enterprises are requesting input that could further improve the mortgage access for LEP mortgage borrowers throughout the life of their mortgage. They are also seeking short-term and long-term solutions to such challenges.
This way, the FHFA can understand the experiences of mortgage borrowers with LEP and come up with appropriate actions.
The input should be submitted electronically or through mail addressed to the Federal Housing Finance Authority, Office of Housing and Regulatory Policy, 400 7th Street, S.W., 9th floor, Washington, D.C., 20219, on or before July 10, 2017.
Justin McHood is a managing partner at Suited Connector and has been recognized by national media outlets as a financial expert for more than a decade.
