By Jane Duong, National CAPACD
Seventy-one percent of Asian-Americans and 77% of Latinos speak a language other than English at home. Approximately 1 in 3 Asian Americans have difficulty communicating in English. With the growth of new immigrant families in the U.S., financial institutions have invested heavily in advertising and marketing to these communities in the hopes of acquiring a new customer base and the capital that many of these households can bring to their bottom lines. One need only to observe bank branches for several major financial institutions in Oakland’s Chinatown, to see how successful financial institutions have been at marketing to many immigrant families regardless of their ability to communicate fully in English.
Banks have demonstrated the capacity to meet language needs when it comes to selling financial services, like originating new mortgages or opening bank accounts. The question however is once these new customers have difficulty making their mortgage payments, are the banks meeting their customers’ mortgage servicing needs?
In talking to housing counseling agencies throughout the country, we have observed time and again the disparate level of service given to limited English proficient homeowners that would allow them to fully access loan modifications and other payment changes that could prevent foreclosure. Mortgage notices are only provided in English. Without mention of how limited English speaking homeowners can seek additional assistance, we fear too many homeowners are not informed fully of their options and needlessly end up in foreclosure.
Further, we hear reports from our counselors that servicers frequently circumvent housing counselors and contact limited English speaking homeowners directly to negotiate the terms of mortgage modifications. This is problematic when homeowners clearly have difficulty communicating in English which often leads to worse results for the homeowner.
Many servicers often cite their use of third-party verbal interpretation services intended to support language needs of borrowers. However, the quality and consistency of the interpretation by this third party is uneven at best since there is no verification of the training or certification of these services to provide competent interpretation of mortgage and financial terminology. We have heard reports of borrowers being told one thing in English and something completely different in their native language through the interpreter.
What does all of this mean for homeowners with limited English proficiency? Simply put, these barriers make it harder for them to negotiate changes in their loan payments and access the relief that has become available through federal and state programs and settlement agreements in the last few years. Consider a case where an underwater homeowner receives a notice that reduces their principal by $50,000 but the homeowner has difficulty reading the notice. Without proper assistance and translation services, that homeowner could eventually land in foreclosure when it could have been avoided.
Last month, the Consumer Financial Protection Bureau (CFPB) released rules that create uniform mortgage servicing standards to protect consumers and hold servicers accountable. The rules offered much needed guidance to improve accuracy and accountability within mortgage servicing including how homeowners are notified of their mortgage status, how fees can be levied, and how homeowners are considered for foreclosure alternatives.
Unfortunately, the mortgage servicing rules did not explicitly identify translation of key mortgage servicing documents as a requirement for financial institutions. The rule also did not provide any guidance on verbal interpretation or communication with borrowers for whom English is not a first language. For many immigrant families, the lack of guidance on this issue is concerning to say the least.
We can do more to meet the needs of all impacted homeowners. The CFPB should issue rules that require the mortgage industry, and by extension the financial services sector, to provide proper translation of mortgage servicing notices that ensures equitable treatment for all homeowners in the foreclosure process. This should also include guidance on certification standards for third-party language interpreters regarding mortgage terminology in the same way that is required for the medical and legal fields. The housing counseling industry has decades of experience and employs many bilingual and bicultural trained housing counselors that can help inform systems and structures to support improved translation and interpretation of English terminology for financial services and mortgage servicing.
This issue of language access is not limited to mortgage servicing, but also applicable to notifying homeowners of loan modifications and principal reductions available through the National Mortgage Settlement and financial services more broadly. As the new vanguard of consumer protections, the CFPB should set the foundation for language access to ensure greater economic justice for homeowners and communities of color in the future.
Jane Duong is Director of Programs and Advocacy for the National Coalition for Asian Pacific American Community Development (CAPACD) headquartered in Washington, D.C.