FHA to Require Mortgage Originators to Ask Borrowers about Language Preference

June 27, 2023 — Press Release

NCLC Advocates Praise New Requirement for Use of Supplemental Consumer Information Form

WASHINGTON – Today, the U.S. Department of Housing and Urban Development’s Federal Housing Administration (FHA) announced that it will require lenders making FHA-insured mortgage loans to use the Fannie Mae/ Freddie Mac Supplementary Consumer Information Form (SCIF) to collect a mortgage applicant’s language preference. Using the form will enable lenders to make information available in the languages that borrowers will understand best. 

Earlier this month, FHA also launched its new language access web page, which provides translations of key FHA mortgage documents in the top five languages most commonly spoken by borrowers with limited English proficiency (LEP). 

“We applaud FHA’s leadership for recognizing how crucial language access is to reducing barriers to homeownership for millions of hardworking families in populations that have been underserved by FHA financing,” said Alys Cohen, senior attorney at the National Consumer Law Center. “FHA is a crucial source of mortgage credit in underserved communities, and collecting language preference will expand FHA’s reach and help borrowers gain access to essential information in their preferred language.” 

“Identifying language preference is an important first step toward serving borrowers with limited English proficiency,” said Nicole Cabañez, Skadden Fellow at the National Consumer Law Center. “We celebrate this tool for allowing borrowers to express their language needs in an efficient, systematic way, while also recognizing that lenders and servicers also must be required, not merely encouraged, to respond to the needs of LEP consumers with concrete steps to increase access to written and oral assistance.We urge FHA  to continue reducing barriers to the mortgage market for LEP homeowners.”

The SCIF (Fannie Mae/Freddie Mac Form 1103) is an industry-recognized form used during the mortgage application process that allows borrowers to voluntarily identify language preferences and provide information on housing counseling and homeownership education they may have received. Borrowers may choose to provide all, some, or none of the information requested on the form. The SCIF will be required for loan applications dated on or after August 28, 2023.

FHA’s announcement follows the Federal Housing Finance Agency’s (FHFA) decision to require language preference data collection through the SCIF as of March 1, 2023, which it proposed in April to codify as a regulation. FHFA publishes the SCIF in English, Spanish, Chinese, Korean, Vietnamese, and Tagalog. FHFA also published a study from the Kleimann Group to identify major barriers for LEP borrowers in accessing mortgage credit and created a Mortgage Translations Clearinghouse for common origination and servicing documents. 

Related materials:

• Coalition Comments to FHFA on Equitable Housing Finance, Language Access, and Fair Lending Oversight, June 26, 2023
• Coalition Comments to the White House Task Force on New Americans re: Expanding Language Access Within the Financial Services Sector, Feb. 7, 2023
• Group letter to FHA re: strengthening language access, Nov. 15, 2022
• Group letter to FHFA re: Improving Language Access in Mortgage Origination and Servicing, Jan. 12, 2022
• Group letter to CFPB urging improved language access protections in upcoming debt collection rulemaking, Nov. 30, 2020
• Coalition Comments to the CFPB in Response to RFI on the Equal Credit Opportunity Act and Regulation B (with appendix of survey results on language access in mortgage servicing), Dec. 1, 2020
• Coalition Comments on FHFA’s Request for Input on Improving Language Access in Mortgage Origination and Servicing, July 31, 2017
• Barriers to Language Access in the Housing Market: Stories from the Field, May 2016