U.S. House of Representatives Considers Bill to Improve Language Access in Mortgage ServicingIn 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.

The Takeaway

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.

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Photo of Austin Holland Austin Holland

Austin Holland’s practice focuses on regulatory compliance matters, government enforcement actions, and financial services litigation. He has represented clients in a variety of matters, but his practice is particularly focused on issues with an emphasis on matters related to housing.

Prior to…

Austin Holland’s practice focuses on regulatory compliance matters, government enforcement actions, and financial services litigation. He has represented clients in a variety of matters, but his practice is particularly focused on issues with an emphasis on matters related to housing.

Prior to joining Bradley, Austin worked for the U.S. Department of Housing and Urban Development in the Office of Litigation, where he handled matters related to affordable housing, reverse mortgages, fair housing, bankruptcy, foreclosures, grant recaptures, rulemaking, religious discrimination, and the Appointments Clause of the U.S. Constitution.

Photo of Christopher K. Friedman Christopher K. Friedman

Chris Friedman is a regulatory compliance attorney and litigator who focuses on helping consumer finance companies and small business lenders, as well as banks, fintech companies, and other participants in the financial services industry, address the challenges of operating in a highly regulated…

Chris Friedman is a regulatory compliance attorney and litigator who focuses on helping consumer finance companies and small business lenders, as well as banks, fintech companies, and other participants in the financial services industry, address the challenges of operating in a highly regulated sector. Chris focuses on both small business lenders and alternative business finance products and has helped non-bank small business lenders, banks who make small business loans, commercial credit counselors, lead generators, and others in the industry. He helps clients launch new products, conduct due diligence, engage in compliance reviews, evaluate litigation risk, and solve some of the unique legal problems faced by companies who work with small businesses. In that vein, Chris has written extensively about the upcoming rulemaking related to Dodd-Frank 1071, which will require data collection and reporting by companies making loans to certain small businesses.

Photo of Christy W. Hancock Christy W. Hancock

Christy Hancock’s practice is dedicated to financial services regulatory compliance and litigation. Her work with mortgage servicing and financial institution clients has given her a broad base of knowledge regarding laws affecting the mortgage servicing business, including bankruptcy and foreclosure best practices, payment…

Christy Hancock’s practice is dedicated to financial services regulatory compliance and litigation. Her work with mortgage servicing and financial institution clients has given her a broad base of knowledge regarding laws affecting the mortgage servicing business, including bankruptcy and foreclosure best practices, payment application, correspondence requirements, allowable fees, loan modifications, escrow requirements, and property preservation. In recent years, the majority of her practice has focused on advising large financial institutions on bankruptcy-related regulatory matters and large-scale remediation projects.