CFPB Proposed Rule Requiring Language Access in Mortgage Servicing Will Help Homeowners Avoid Foreclosure

July 11, 2024 — Press Release

Proposal includes watershed measures to assist homeowners with Limited English Proficiency

WASHINGTON – The Language Access Task Force of Americans for Financial Reform, a coalition of fair housing and civil rights organizations, applauds Wednesday’s announcement from the Consumer Financial Protection Bureau (CFPB) proposing rules that would ensure that borrowers with limited English proficiency (LEP) have a meaningful opportunity to seek assistance from their mortgage companies in times of distress, helping them stay in their homes. The proposal, which includes additional improvements to the general hardship assistance process, follows a petition from the National Consumer Law Center (NCLC) urging the Bureau to include language access in the mortgage rule.

“Borrowers with language barriers who are facing foreclosure often rely on family members, including minor children, to act as interpreters when trying to save their homes from foreclosure,” said Nicole Cabañez, Skadden Fellow at the National Consumer Law Center. “This proposal, if finalized, will make this unjust reality less likely for LEP borrowers facing financial hardship and will help families save their homes. It will also allow LEP families the dignity of communicating about preserving their homes with greater understanding and without the risk of embarrassment or judgment.”

The proposed rule includes several watershed language access measures. First, the proposal requires that key written communications be provided to all borrowers in both English and Spanish. Based on the most recently available 2022 American Community Survey of 1-Year Estimates from the United States Census, almost one fourth of the U.S. population resides in a household that speaks a language other than English, with Spanish-speaking households accounting for 59 percent of households with limited English proficiency. 

Second, these notices will also include brief messages in five servicer-selected languages notifying homeowners of the availability of document translations in those languages and how the borrower can request those translations. This requirement will make essential communications available to borrowers who speak some of the other more common languages in LEP households, with servicers able to tailor the choice of languages to specific markets.

Third, the proposal requires that mortgage servicers provide accurate oral interpretation services to LEP borrowers, enabling them to get their questions answered in real time. This proposal will improve the quality of communication between LEP borrowers and their servicers, reducing the time it takes for a borrower to get their account questions answered and be evaluated for foreclosure-avoidance options. 

“Language barriers should never be the reason a family loses their home,” said Ruth Susswein, Consumer Action’s Director of Consumer Protection. “The CFPB is proposing real help for struggling families whose first language is not English. Access to in-language information means consumers will learn what options they have to regain their financial footing and remain in their homes.”

The CFPB’s proposed language access rules build on a years-long interagency effort to expand access to the mortgage market for LEP mortgage borrowers. Government investor requirements for conventional and FHA loans compel mortgage lenders to collect information on borrower language preference at the application stage. Federal agencies, including the Federal Housing Finance Agency and the CFPB, have created comprehensive databases of government-approved model translations and forms. The CFPB also put out guidance in January 2021 clarifying that providing language access supports fair housing goals and encouraging industry to provide some forms of language assistance, even if those efforts are incremental.

“The CFPB’s proposed rules address a critical issue affecting Limited English Proficiency (LEP) borrowers. Previously, many LEP homeowners faced foreclosure without fully understanding their options, often abandoning their homes prematurely. Even when entering into a loan modification, language barriers led to misunderstandings of crucial terms, such as ‘certified bank check,’ putting their homes at risk again. By requiring clear, translated communications and language assistance, these rules aim to prevent such misunderstandings, ensuring LEP borrowers can make informed decisions about their homes and comply with modification terms accurately. This change could significantly reduce unnecessary foreclosures and help more families maintain stable housing,” said Marlene Cortés, senior manager for the Language Justice Program at Empire Justice Center. 

“This proposal represents a significant step toward a fairer marketplace for borrowers with limited English proficiency. Mortgage servicers have a duty to serve LEP customers and help them avoid foreclosure, ensuring critical information is delivered where possible in the homeowner’s language and with access to oral interpretation services as needed,” said Christine Chen Zinner, senior policy counsel at AFR.  

“This proposed rule will provide real, enforceable protections for LEP borrowers, and will also set a clear standard for servicers, as to what is fair and equitable to provide in terms of language access. Navigating the loss mitigation process, and other servicing issues like escrow shortages and payment discrepancies, is much more difficult for LEP borrowers, so I am thrilled these clear regulations will exist,” said Loraine Martinez Bellamy, staff attorney at the Connecticut Fair Housing Center. 

“In recent years, Latinos have seen significant gains in homeownership. This CFPB proposed rule will help maintain these gains and ensure that Latinos with LEP facing challenges in their homeownership process are not left behind. The language access measures included in this proposal are critical to ensure borrowers with limited English proficiency can navigate the homeownership process on equal terms as their English-proficient counterparts. By limiting fees, streamlining paperwork, and improving communications, especially for limited English speakers, vulnerable homeowners will face reduced barriers to keeping their homes,” said Lisette Engel, Director of Economic Policy Project at UnidosUS.

Comments on the CFPB proposal are due September 9, 2024.