In recent weeks, a debate between trade and consumer groups has unfolded in connection with whether a planned revision of the Uniform Residential Loan Application (URLA) by the Federal Housing Finance Agency and the government-sponsored enterprises—Fannie Mae and Freddie Mac—should include a question about a borrower’s language preference.
The staff of the FHFA, Fannie Mae, and Freddie Mac are expected to finalize the redesign of the URLA in the near future. Two recent letters transmitted to FHFA Director Mel Watt, the first submitted jointly by eight national banking, mortgage, and credit unions and the second submitted by a coalition of 22 consumer, community, and housing organizations, serve to frame the debate and to illuminate the arguments for and against including a language preference query on the URLA form.
Trade groups. In their June 8, 2016, letter to Watt, the American Bankers Association, Consumer Bankers Association, Consumer Mortgage Coalition, Credit Union National Association, Housing Policy Council, Independent Community Bankers of America, Mortgage Bankers Association, and National Association of Federal Credit Unions caution the FHFA that the inclusion of a question on the redesigned URLA form about a borrower’s language preference “raises several serious compliance and legal concerns that strongly weigh against including it on the form or, at the very least, warrant a full vetting through a notice and comment process before its inclusion.”
While the organizations indicate their support for “a range of efforts to ensure that borrowers are well informed during the mortgage process,” they maintain that a question about language preference on the URLA would:
- require lenders to ask borrowers sensitive questions before the “interactions and implications” of other mortgage laws and regulations are understood and addressed;
- create expectations for consumers that cannot be met, particularly since an estimated 350 languages are spoken in the United States;
- provide an “inferior means” of obtaining and analyzing data;
- detract from other, more promising avenues concerning limited English proficiency;
- potentially expose mortgage lenders and pertinent parties to liability;
- increase costs for lenders, servicers, and borrowers alike, and impose new obligations on servicers; and
- require translation services without accompanying, needed government documents and materials.
Consumer groups. In contrast, in its June 23, 2016, letter to Watt, the coalition of consumer, community, and housing organizations urges the FHFA to include a question on the revised URLA that would ask borrowers to indicate their language preference. The coalition emphasizes that the redesign of the URLA form “presents a unique and unprecedented opportunity to take an important first step towards addressing equitable access to the mortgage market for LEP [limited English proficiency] consumers.”
While commending the FHFA, Fannie Mae, and Freddie Mac for the “massive, multi-year undertaking” of redesigning the URLA, the coalition addresses the concerns raised by the industry trade groups. Among other things, the coalition maintains that:
- asking a borrower’s preferred language on the URLA “would not create any new obligation to originate or service in languages other than English,” and, consequently, industry concerns about added costs or providing translation services without agency guidance are not warranted;
- the FHFA’s consideration of a disclaimer, indicating that a borrower’s preference for a non-English language would not guarantee that communications would be in that particular language, “should be sufficient to alleviate much of the concern expressed in the industry letter”;
- because loan originators and servicers need to know what languages their customers speak as “a first step to addressing language access in the mortgage market,” the URLA is the “best possible vehicle” for collecting that language information; and
- since the redesigned URLA will not be implemented until 2018, “there is more than enough time” for regulators to work together to issue guidance to the industry about their concerns regarding “liability under UDAAP and other fair lending statutes” in connection with a borrower’s language preference.
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