Comment Detail

Comment

June 29, 2017

Federal Housing Finance Agency,
Office of Housing and Regulatory Policy,
400 7th Street, S.W., 9th floor,
Washington, D.C., 20219.

Dear FHFA Staff:

Thank you for the opportunity to respond to your request for information
regarding Limited English Proficiency residents and the mortgage market. Housing and Economic Rights Advocates (HERA) is a 13 year old, non-profit law office providing legal services to low and moderate income residents across the State of California from our home-base in Oakland, California. We have served thousands of vulnerable homeowners over the course of our existence at all stages of the homeowner life-cycle— from pre-purchase through to early, middle and later stages of homeownership, including foreclosure prevention needs, and the myriad of other issues that arise over the course of owning a home. We base our comments on our years of direct services to the public, as well as our years of providing technical assistance and training to HUD certified housing counseling agencies. The following are our brief responses to questions posed.

A. Existing Processes and Tools

Question A1: What processes and tools are in use today by originators and/or servicers to facilite the origination and servicing of mortgages for LEP/PL borrowers? Who develops these tools? Are they fully utilized and, if not, why? How could these processes and tools be improved?

For originations, we are seeing marketing to prospective home purchasers in several different languages. Several lenders, such as Chase and Wells Fargo, maintain websites in Spanish. We are not sure about what marketing is being done in other languages. Our state housing finance agency also maintains a website in Spanish, which we think is helpful, though we are uncertain about the uptake. Since the foreclosure crisis began to diminish and mortgage landing through mainstream channels re-emerged in California, HERA has seen primarily FHA insured loans made to LEP clients, and we have served residents with complete packets of loan documents that are in Spanish, which is a welcome sight.

On the mortgage servicing side of the house, our LEP clients are able to reach servicing staff in Spanish. We are not sure about how easily servicing staff can be reached with other non-English language skills. We also do not know whether residents who reach servicing staff in their primary language are being offered the same options as homeowners whose first language is English.

We have sometimes seen servicer letters and loan modification offers in Spanish to clients who are LEP in Spanish. We have not seen those documents in other non-English languages.

We would like to see industry consistently use of LEP borrowers’ primary language for all communications. An initial question for an LEP borrower, or caller should be what the preferred language is. Servicers could and should also request that information in writing and maintain that information in their files so that even as servicing is transferred, successive servicers will have that information.

Question A2:What processes and tools are in use today by other mortgage industry participants (such as real estate agents, housing counselors, nonprofit consumer advocates, and vendors) to facilitate transactions with LEP borrowers? Who develops these tools? Are they fully utilized and, if not, why? How could these processes and tools be improved?

The marketing we see by industry in non-English languages is carried out online through websites and via youtube, through the radio and television, and through on the ground distribution of solicitations in whatever the predominating non-English language is for a given neighborhood or zip code. We see major real estate companies, like Keller Williams and Century21 with websites in Spanish. We have also seen marketing on television by realtors in Vietnamese and Chinese. We have never seen a realtor’s agreement or a promissory note in any non-English language other than Spanish, despite the fact that California Civil Code, Section 1632, requires that key documents be provided in Spanish and four of the state’s other top languages besides English.

At a bare minimum, a summary should be provided of all key terms of the contractual relationship in which the LEP consumer is engaged. Bargaining power is lopsided enough in the complex world of home purchase and post-purchase home retention without the added factor of language access. To not provide key information in the language of greatest comfort of the LEP consumer is simply unconscionable.

Question A3: How and when do originators, servicers, and other mortgage industry participants typically learn a borrower has limited English proficiency?

Industry learns of the LEP status of the consumer from direct contact, whether by phone, or in-person.

Question A4: To what extent are existing translated documents used by the industry? Are they useful? How are they used? What could increase their usage? Are more translations needed (i.e., translations into more languages or translations of more documents)? Who should develop these translations? Where should these documents be housed?

Before and during the Great Recession, HERA saw only a handful of origination documents in Spanish. We never saw them in any other non-English language. After the Great Recession, we have seen Spanish language promissory notes and disclosures more frequently, but we still have yet to see other non-English language documents provided to borrowers by lenders. Real estate companies are great at providing marketing materials in California’s top 5 languages, but we have not seen contracts offered in non-English languages other than Spanish.

We believe a combination of strategies could increase the use of translated documents. For some non-English languages, such as Chinese and Korean, translation of some key technical terms commonly found in mortgage loans or real estate contracts can vary. Thus, HERA recommends that FHFA consider providing an approved compendium of translated mortgage terms in the top 20 languages used in the U.S., particularly for languages in which writing is not romanized or the language is not latin based.

Question A5:To what extent do originators and servicers use bilingual staff or translation services to assist LEP/PL borrowers? If so, how well does this work? How can these efforts be supported?

We are not certain how often bilingual staff are used. Our impression is that there is no consistency across the servicing industry, especially given the use of call centers for different aspects of servicing.

B. Current Barriers to Address Language Access

Question B1: What are the most significant barriers that exist for LEP individuals in gaining access to the mortgage lending process? Are these barriers also
applicable to PL borrowers? Please address the entire mortgage life cycle
in your (from the marketing phase through origination and servicing) in your response

Barriers seem to vary for LEP individuals in gaining access to the mortgage lending process, depending on what the consumers’ primary language is. We have no doubt that the availability of credit also varies substantially by region across the United States. In California, one of the most diverse states in the country, we see far more limited access to mortgage lending for consumers whose strongest language is Chinese, Vietnamese, Korean or Tagalog. Whereas many institutions have staff who are bilingual in Spanish, fewer have staff bilingual in these other important languages. LEP residents want to be able to converse directly with someone who is versed in their language, rather than going through an interpreter. They are also completely dependent on the verbal representations of the industry staffer they have spoken to for an understanding of loan terms.

In addition, our LEP clients frequently have less of a sense of what they are entitled to expect as borrowers than our native English speaking clients. They may not have any of the sense of the norms of becoming a homeowner or of home loan borrowing as they are simply not exposed to as much of that messaging in their primary language. Some of our clients also grew up in countries without the same type of mortgage lending structure or options, and their familiarity is further limited.

Our impression is that the problems is not as significant for our PL clients who may be able to understand written English well but may not have verbal communication skills that are as strong. They seem to have a better sense of the overall parameters of whatever agreement they entered into when they have received documents only in English, versus our LEP clients. For example, a few of our PL clients have been able to discern through reading documents after they went home that they were given something different in writing than what they thought they had negotiated for verbally.

Question B2: Please identify any practices that could be particularly effective in ensuring LEP borrowers can understand and participate in the mortgage process.

Homebuyer counseling in a consumer’s first language would be the first, best choice. Consumers need an independent source of information to orient themselves to the process and complexities and terminology of homeownership and mortgage lending. HERA suggests that, in addition, simplified home buying mini-videos and booklets be promulgated by FHFA in a wide variety of languages through some of the same channels that industry is using: youtube, websites, foreign language television/commercial spots, and radio.

Question B3:Are mortgage industry participants fully aware of the existing services and materials available to assist LEP borrowers? Would public education measures (including measures targeted to lenders and servicers) be useful in connecting LEP borrowers to the services and materials available? What methods of outreach would work best for LEP borrowers (radio, television, social media, etc)?

Mainstream mortgage industry staff with whom we have spoken are aware of existing services and materials for LEP borrowers, at least at the management level. Whether they communicate that information to line staff, we are not certain. Radio, television and social media, in that order, would be highly useful in communicating public education to LEP residents.

C. Potential Actions to Improve Language Access – Short Term
FHFA recognizes that process improvement recommendations may be limited or extended in duration depending on operational, legal, and system impacts. FHFA seeks input on potential short-term recommendations (with implementation cycles of less than 18 months) that may allow the industry to make significant improvements in the near future.

During FHFA’s initial explorations of potential approaches to improving language access, the following have been proposed by various entities as potentially useful measures. FHFA presents these ideas to aid stakeholders in providing feedback on potential improvement measures and encourages suggestions of other actions for consideration.

• Creation of a centralized clearinghouse of resources to serve LEP borrowers. •
• Public education measures to enhance borrower and industry knowledge. •
• Translation of additional origination and/or servicing documents into languages
commonly spoken by LEP borrowers. This could include translating consumer-
facing documents presently translated into Spanish into other languages.
Enterprise support for language translation services (e.g., updates to guide
requirements).
Increase awareness of multi-lingual nonprofit housing counselors and/or funding for language translation services by nonprofit housing counselors.

Public education by FHFA, perhaps in partnership with the CFPB and/or FTC, utilizing media outlets that reach LEP residents would be incredibly helpful. Partnering with state housing finance agencies might help with dissemination, and, perhaps, building access to materials into HUD certified housing counseling activities and credit counseling services could be useful.

Translation of key documents into commonly spoken languages, and requiring use of those materials by originators and servicers is an excellent idea. If servicers and originators are not required to utilize these documents, then there will be inconsistent usage.

Question C1-C9:
Please provide input on whether particular measures described above should or should not be considered for FHFA and the Enterprises to undertake to improve language access and explain why? Which measures should be given top priority and why?

Top languages of use can vary by region. Spanish, Chinese, Vietnamese, Tagalog, Thai, Korean and Russian would be a good, minimal starting set of languages to focus on, but we recognize that some good-sized municipalities include other LEP populations that should be served as well. It may make sense for FHFA to invest in supporting HUD certified housing counseling agencies to provide interpretation, but we are concerned that the independence of housing counseling agencies remain paramount. Receipt of funding or contracting with financial services providers directly may create conflicts of interest.

D1-D12. Potential Actions to Improve Language Access – Long Term

As a non-profit, we track the language used by our clients and make sure to provide services in the language of choice of our clients, whether through an interpreter or by way of bilingual staff. The mortgage origination and servicing industry should do the same. If LEP borrowers were asked to provide information about preferred language, we believe, from our experience as legal services providers, that they would generally, in our experience, provide that information to make for improved services to their benefit.

We thank FHFA for pursuing the issue of services to LEP and PL residents and appreciate the opportunity to comment.

Sincerely,

Maeve Elise Brown, Esq.
Executive Director
Housing and Economic Rights Advocates