Language Access in the Mortgage Market

Transcription

1 Language Access in the Mortgage Market Moderator Kyung Cho Miller, JP Morgan Chase Panelists Elizabeth Kemp, MBA Tobias P. Moon, Akerman LLP Alfred Pollard, FHFA

2 Making Lending and Servicing Great Again LEP Borrowers May 10, 2017 Tobias P. Moon Partner, Consumer Financial Services Practice Group Akerman LLP

3 Historical Overview

4 Many languages spoken in American households today Over 350 languages spoken across the country. Significant portion of metro populations speak a language other than English at home. New York City: 192 languages spoken by 38% of the population Los Angeles: 185 and 54% Chicago: 153 and 29% Dallas: 156 and 30% Philadelphia: 146 and 15% U.S. Census Bureau Report Release Number CB15-185

5 Early efforts by the federal government President Clinton signs Executive Order on August 11, Mandates improved access to federal programs and activities for individuals who are limited in English proficiency due to national origin. LEP limited English proficient becomes official term used by the federal government. Federal government website ( defines LEP individuals as individuals who: Do not speak English as their primary language; and Have a limited ability to read, speak, write or understand English. LEP individuals may require language assistance to obtain financial products or services.

6 Underserved immigrant population A recent report from the Migration Policy Institute suggested 41.3 million immigrants resided in the United States in 2013 and about 50 percent 20.5 million spoke English less than very well. Similar data released by the U.S. Census Bureau suggests roughly 25 million people in the United States speak English less than very well over the period of Fannie Mae research suggested homeownership rates for U.S. born borrowers decreased during the years of 2000 to 2010, while immigrant homeownership rates increased over this period.

7 What Barriers Exist for LEP Consumers?

8 CFPB Considerations

9 CFPB's expectations CFPB's Supervision and Examination Manual requires examiners to assess the servicer's policies and procedures for servicing loans held by LEP borrowers. A servicer should: Identify borrowers requiring non-english language assistance; Provide non-english call options for borrowers; Make dedicated customer service agents who speak other languages available. These agents must receive the same training and possess the same authority as English speaking agents; and Translate English language documents into other languages. CFPB Examination Procedures, ECOA Risks Related to Mortgage Servicing (January 2014)

10 CFPB's supervisory observations Acceptable practices observed by CFPB's examiners: Marketing and servicing of loans in languages other than English; Collecting consumers' language information to facilitate communication with LEP consumers in a language other than English; Translating certain documents sent to borrowers including monthly statements and payment assistance forms into languages other than English; Using bilingual or multilingual customer service agents (including SPOCs) and other forms of oral customer assistance in languages other than English; and Testing and monitoring of customer assistance provided in other languages. CFPB Supervisory Highlights, Issue 13, Fall 2016, page 21 (October 2016)

11 Acceptable factors used by financial services providers Language access plan may consider: Census Bureau data on the demographics or prevalence of non-english languages within the entity's footprint; Communications and activities most significantly impacting consumers (e.g., loss mitigation and default servicing); and Compliance with federal, state and other regulatory provisions addressing English language compliance requirements. CFPB Supervisory Highlights, Issue 13, Fall 2016, page 22 (October 2016)

12 Compliance management CMS should include the following: Fair lending policy statement documenting policies, procedures and decision making related to the institution's provision of language services; Regular fair lending training; Policy review for potential fair lending risk; Monitoring compliance with fair lending policies and procedures; Testing of policies and procedures intended to reduce fair lending risk such as controls on loan originator discretion; Statistical analysis of loan-level data for potential disparate impact on underwriting, pricing or other aspects of the credit transactions; Assessing marketing plans; and Overseeing fair lending compliance by officers and directors. CFPB Supervisory Highlights, Issue 13, Fall 2016, page 24 (October 2016)

13 UDAAP related language considerations Dodd Frank granted CFPB rulemaking and enforcement authority to prevent unfair, deceptive or abusive acts or practices. UDAAP rulemaking not likely. Industry participants must look to CFPB examination manual and enforcement actions for guidance on what constitutes a UDAAP violation.

14 HUD's Guidance

15 Intentional discrimination Examples: Blanket refusal to deal with LEP individuals likely is not motivated by genuine communication concerns. Advertisements saying all borrowers must speak English. Denying access to free or low cost language assistance. Refusing to lend to individuals who speak a certain language but lending to individuals speaking other languages.

16 Discriminatory effects Examples: Refusing to allow LEP borrowers to have mortgage documents translated. Failing to provide LEP borrowers with translated documents readily available. Restricting a borrower's use of an interpreter. Requiring an English speaker cosign the documents.

17 HUD's warning If negotiations for a mortgage are conducted in a non-english language, some states require the lender to provide certain documents in this language. Avoiding compliance with a state law is not a substantial, legitimate, nondiscriminatory interest justifying a refusal to serve LEP borrowers.

18 Federal and State Statutory Requirements

19 Federal statutes and regulations permit but do not require translations ECOA/Regulation B and EFTA/Regulation E Permit foreign language disclosures when accurate and English disclosures provided upon request. 12 C.F.R (e),1005.4(a)(2). TILA/Regulation Z Requires providing information about trigger terms and required disclosures in the same language in an advertisement. 12 C.F.R (i)(7). TRID Allows a lender to translate both the loan estimate and closing statement into languages other than English. 12 C.F.R (o)(5)(ii), (t)(5)(viii).

20 Examples of state requirements California Negotiations occurring primarily in Spanish, Chinese, Tagalog, Vietnamese or Korean require the lender to provide a translated contract or agreement to the borrower in the language in which it was negotiated. CAL. CIV. CODE 1632(a). Connecticut Notice for a dishonored check must be provided in both Spanish and English. CONN. GEN. STAT a(g). Idaho If the trust deed is in Spanish, the Opportunity to Request a Loan Modification and Loan Modification Assistance form also must be in Spanish. IDAHO CODE ANN C(2)(b).

21 More examples of state requirements New York Servicer must provide the 90 day notice in the borrower's native language when the borrower is known to have limited English proficiency and this language is one of the six most common non- English languages spoken by individuals with limited English proficiency in New York based on U.S. census data. N.Y. Real Prop. Acts. 1304(5). Oregon Communicating or soliciting business and negotiating in a foreign language requires providing certain documents in both English and the other language. OR. REV. STAT. 86A.198(1)-(2). Texas If the terms of a home equity loan were negotiated in Spanish, a summary of those terms and other pertinent information must be provided to the borrower in Spanish. TEX. FIN. CODE (a-1). Rhode Island Servicers must provide a mediation notice in English, Portuguese and Spanish. R.I. GEN. LAWS

22 What Are Lenders Doing Now? How Effective are Current Measures?

23 If you have translation capability for oral translation during loan origination, how is it provided? If you have translation capability for oral translation during loan servicing how is it provided? 0.25 We have in-house capability We have in-house capability We hire an outside vendor for all languages We do not have translation capability We hire an outside vendor for all languages We do not have translation capability

24 MBA Language Access As required by law, we offer translated versions of the Texas Home Equity disclosure. We offer Initial and Closing Packages in 5 other languages. Authorization and permission form to speak to a borrower through a translator (often a real estate agent) (We do not offer translated documents) However, we do have a language translation company that will provide assistance when needed. HomeBuyer Education and/or Counseling (Spanish)

25 MBA Language Access Foreclosure notices (and related documents such as notices of rights to cure, mediate, modify, etc.) include foreign language text where required by applicable law. Additionally, a Spanish version of the Request for Modification Assistance is available online as a customer reference. We only provide translated versions of documents when required by law - typically relying upon a form. Past due notices

26 Do you refer LEP borrowers to housing counseling agencies for assistance with language translation? Yes No

27 Learning and Tracking Borrower Language Preference

28 How do you most often learn that you are interacting with an LEP customer? The customer requests assistance in another language We ask the customer if language assistance is needed Other (please specify) In some cases, the customer requests assistance. In other cases, it is simply evident that a language barrier exists and an interpreter is engaged to assist. Hybrid of the above options - customer opts to speak with Spanish-speaking representative through automated phone system. Customer request assistance or prior servicer indicates the consumer had a language preference. Loan Officer marketing to Hispanic communities. Customer gives permission to speak with a 3rd party who speaks English and is usually a family member.

29 Do you have the ability to communicate with a caller in a foreign language during loan origination? Do you have the ability to communicate with a caller in a foreign language during loan servicing? Yes 0.2 Yes No Not applicable to my business No Not applicable to my business

30 Key Takeaways 1) All stakeholders need a clear and shared understanding of LEP consumers needs and the barriers they encounter. We want to solve the right problems, and scope the solutions appropriately. 2) Standardization and consistency will be key, especially if translation is involved. 3) CFPB needs to take the lead in translation. 4) Coordination will be necessary industry, regulators (state and federal), consumer advocates, housing counselors.