Uniform Residential Loan Application to Include Language Preference Question

The Federal Housing Finance Agency announced today that it will include a language preference question on its updated Uniform Residential Loan Application. The question will allow borrowers to specify if they wish to communicate in a language other than English and identify their preferred language. The new URLA form — which FHFA plans to issue this later this year — will go into effect beginning in July 2019 and will be mandatory for loans made by Fannie Mae and Freddie Mac beginning in February 2020.

In response to numerous concerns raised by ABA and other industry groups about the legal risks that such a question would pose for lenders, FHFA included additional disclosure language intended to inform borrowers that their loan transaction is likely to be conducted in English, and that communications may not be available in their language of choice. The text also states that the language designation is for information collection purposes only, and is not intended to create an expectation that the lender will proceed with the transaction in the borrower’s specified language.

In addition, the text includes information on the language services available to borrowers and directs them to various language access resources. Fannie and Freddie will also make available an optional disclosure in several languages informing borrowers of language resources, FHFA said.

ABA expressed disappointment over FHFA’s decision to move forward with the question and remains concerned that the inclusion of the question will raise questions of liability under rules not promulgated by FHFA and for which FHFA cannot provide safe harbor or alleviate concerns through disclosures. ABA will continue to analyze the text in the coming days to determine if those concerns will be adequately addressed. For more information, contact ABA’s Joe Pigg.


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