FHFA: Solving Complications in Mortgage English Proficiency

The Federal Housing Finance Agency (FHFA) issued a Request for Input (RFI) Thursday for problems qualified Limited English Proficiency (LEP) borrowers face during the mortgage life cycle process. Per FHFA’s 2017 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions, the Enterprises must identify major challenges for LEP borrowers in accessing mortgage credit, analyzing potential solutions, and developing a multiyear plan appropriate for the Enterprises to support improved access.

FHFA looks to learn more about the procedures and tools that loan originators, servicers, and other parties in the mortgage lending process currently utilize to assist LEP borrowers through this RFI. They would like to identify the existing requirements, including laws and regulations that guide practices for interacting with LEP borrowers and to better understand the challenges in effectively serving this population.

The FHFA reported that the number of LEP individuals in the United States has significantly increased over the past few decades. According to the most recent American Community Survey, 9 percent, or 25 million individuals in the U.S. are considered LEP. Among those, 64 percent speak Spanish, 7 percent speak Chinese, 3 percent speak Vietnamese, 2 percent speak Korean, 2 percent speak Tagalog, 2 percent speak Russian. By 2060, according to the U.S. Census Bureau’s 2014 national projections, the share of the population that is foreign born will grow to 19 percent from approximately 13 percent currently. Along with that, the amount of mortgage borrowers should increase, as well.

Though the Enterprises already offer information and translated documents, primarily Spanish, on their prospective websites, the FHFA continues to hear from stakeholders that LEP negatively impacts access to credit. Qualified borrowers may avoid applying for a mortgage due to language barrier concerns. Conversely, they may rely too heavily on others that are not as familiar with the mortgage process increasing their risk of being steered into a predatory loan and in turn, having difficulty navigating possible loss mitigation options if they fail to pay their mortgage.

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