The Federal Housing Administration will begin requiring mortgage lenders to use the same Borrower Language Preference Form than government-sponsored companies.
This document, the additional consumer information formis currently supposed to be presented to the borrower if the loan is to be acquired by Fannie Mae or Freddie Mac, although the consumer may choose not to fulfill it.
All creations since March 1 must include this form, which Fannie Mae and Freddie Mac call the 1103, in the file.
However, a regulatory proposal by the Federal Housing Finance Agency would further codify the SCIF requirement, broadening the scope of the original announcement and not for the better, the Mortgage Bankers Association said in a June 26 comment letter.
“The experience of using SCIF is new, and we should allow time to see its benefits before making it a regulatory requirement,” the MBA letter said. “The assertions made in the rule about the usefulness of the data are unsubstantiated given the short time that has elapsed since the SCIF has been widely used.”
The FHA announcement is consistent with the FHFA’s initial statements on the use of the SCIF form, allowing the borrower to provide all, some, or none of the requested information.
“SCIF has already been adopted for conventional mortgages and we believe its use is even more important for FHA-insured mortgages, given the FHA’s outsized role in providing access to mortgage finance for underprivileged populations. serviced,” said Sarah, assistant undersecretary for single family housing. Edelman in the press release. “This announcement complements the work we recently completed to provide translated versions of mortgage documents and educational resources for homebuyers.”
The FHA will require that a SCIF be submitted with all loan applications dated August 28 or later.
The agency recently added Chinese, Korean, Spanish, Tagalog and Vietnamese language versions of over 30 single-family mortgage documents associated with its programs.
Of the nearly 305 million people living in the United States in 2019, nearly 25.7 million said they had no command of English, according to the American Community Survey. The largest group is the 16.3 million Spanish speakers. More than 1.8 million Chinese speakers and more than 875,000 people whose primary language is Vietnamese make up the next two largest groups.
The National Consumer Law Center supports both the FHFA proposal and the FHA decision.
In its June 26 comment letter to FHFA, the consumer group calls for repairers to be required to use a “SCIF-like form” to obtain their customers’ language preference.
Similarly, the NCLC supports the use of the form in all segments of the process with respect to FHA-insured mortgages.
“Identifying language preference is an important first step in serving borrowers with limited English proficiency,” Nicole Cabañez, Skadden Fellow at NCLC said in a press release. “We celebrate this tool for enabling borrowers to express their language needs in an efficient and systematic way, while also recognizing that lenders and services must also be required, not just encouraged, to meet the needs of LEP consumers with concrete steps to increase access to written and oral assistance.”
The NCLC response also asks the Federal Housing Finance Agency to require lenders and services to obtain language preference information for loans that Fannie Mae and Freddie Mac purchased before March 1.
In addition, “FHFA should also require companies to encourage, if not require, lenders and providers to create, maintain, and regularly update their own language access plans,” the NCLC letter states. “These plans will establish a roadmap whereby lenders and services will take into account the languages most commonly spoken by their [limited English proficient] mortgage customers, the most important information for these customers to understand, and the steps they can take to improve language access given available resources and costs. »