ABA Reiterates Concerns over Language Preference Addition to URLA

ABA and several trade associations today wrote to Federal Housing Finance Agency Director Mel Watt repeating concerns they had previously raised about the agency’s proposal to include a question on the Uniform Residential Loan Application that asks borrowers to indicate their language preference. The groups reiterated that the question would create greater customer confusion, introduce new compliance risks and expose the industry to potential liability, and urged FHFA to strike the question from the application.

The groups previously pointed out that including a language preference question would create a reasonable expectation that the customer would receive communication in their designated language, and that there are currently no rules to guide lenders on what they should do in light of a borrower’s response. In the cases of borrowers indicating a non-English preference, lenders could be left open to UDAAP liability if they did not proceed in the specified language.

The associations further criticized the agency for its lack of transparency in developing and introducing the question, adding that the industry was not given ample time to provide feedback, and that FHFA did not adequately address the legal concerns raised by the question’s inclusion. They recommended that FHFA consider alternative ways to gather data on language preference, such as surveys developed by the regulatory agencies.

Editor’s note: The attachment to the letter with analysis of the proposed language preference question includes a header indicating that it is confidential and not for further distribution.  ABA has sought, and received permission from FHFA to share this language with our members. For further information, or to view the letter and attachment, contact ABA’s Joseph Pigg