In recent months, regulatory bodies throughout the federal government have focused on ways to promote greater access to financial products and services to limited English proficiency (LEP) consumers. Take for example the Consumer Financial Protection Bureau’s (CFPB) January 2021 statement encouraging financial institutions to better serve LEP consumers and examples of recent enforcement actions by the U.S. Department of Housing and Urban Development (HUD) relating to discrimination based on national origin and LEP status.
These efforts to support LEP consumers have recently expanded beyond the regulatory arena and are now being taken up through proposed legislation. In May, Rep. Sylvia Garcia (Texas) introduced a bill titled Improving Language Access in Mortgage Servicing Act (H.R. 3009). The bill is focused on providing LEP consumers with options to receive written and oral communications in languages other than English. If passed into law, the bill would require a number of actions by mortgage loan originators (MLO) and servicers, including providing each borrower with a form that requests the borrower’s preferred language, providing available forms in up to eight different languages as selected by the CFPB, documenting each borrower’s preferred language, and providing, presumably cost free, oral interpretation services to any borrower requesting such services. The bill was referred to the U.S. House Committees on Financial Services and Veterans’ Affairs for consideration. Although the draft legislation was approved by the Committee on Financial Services, it has not been considered by the Committee on Veterans’ Affairs. A copy of the bill as marked up by the Committee on Financial Services can be found here.
If enacted, the bill will increase MLO and servicer LEP regulatory compliance obligations and will present unique compliance challenges during implementation. Identifying these challenges, a number of groups, including the Mortgage Bankers Association (MBA), have submitted comments to the U.S. House Committee on Financial Services. Those comments have suggested that any version of the bill passed into law should provide a federal preemption clause that provides lenders with a uniform legal framework for the LEP requirements, much more clarity on the required actions by MLOs and servicers, a safe harbor for lenders complying in good faith with LEP legislation and regulations, and a database of government-approved translation services.
It’s expected that the U.S. House of Representatives will take up a vote on this bill in the coming months. While the future legal effect of this bill remains to be seen, it is clear that both the executive and legislative branches are focused on efforts to provide additional resources and protections to LEP borrowers. MLOs and servicers should ensure that they are currently complying with all legal mandates and agency guidance to serve LEP borrowers and be prepared for increased requirements and scrutiny from various governmental bodies through LEP legislative and regulatory actions.