The change will allow borrowers who prefer to communicate in a language other than English to identify that language. Additionally, the update will give such borrowers clear disclosures that English will likely be used throughout the mortgage transaction and that language resources may not be available.
The move is part of a broader effort by the FHFA, together with Fannie Mae and Freddie Mac, to help limited English proficient (LEP) borrowers in the US to gain language access.
"In carrying out FHFA's statutory responsibility to support access to credit, FHFA has committed to improving the ability of all mortgage-ready borrowers to understand and participate fully in the mortgage process," FHFA Director Melvin Watt said. "Adding a preferred language question to the URLA will enable mortgage industry participants to connect LEP borrowers to available language access resources. This will support access to credit for a growing segment of the nation's housing finance market."
FHFA said that improvements in access for LEP borrowers will benefit all segments of the mortgage market. The broader revision of the URLA offers a good opportunity to begin capturing preferred language information and is an important step toward this goal, the agency said.
Fannie Mae and Freddie Mac will publish the final redesigned URLA later this year. The redesigned URLA may be used by lenders starting in July 2019. However, the use of the form will not be required for Fannie Mae and Freddie Mac loans until February 2020.
FHFA seeks to improve credit access mortgage borrowers with limited English
FHFA requests public input to better serve borrowers with limited English proficiency
The Federal Housing Finance Agency (FHFA) has decided to add a preferred language question to the redesigned Uniform Residential Loan Application (URLA).