FHFA to Drop Language Question From Mortgage Application; CU Trades Approve

A decision by the Federal House Finance Agency to abandon a language preference question on the Uniform Residential Loan Application was applauded by credit union trade organizations but condemned by consumer groups.

The FHFA announced in 2017 that it would add the language question to the Uniform Residential Loan Application. The agency last week said it would make changes to the form, including dropping the language question, and that the deadline for its mandatory use would be pushed back.

In 2017, CUNA and NAFCU joined several other financial services trade groups in asking then-FHFA Director Mel Watt to abandon the language questiont. Watt replied that the question would still allow the mortgage transaction to be conducted in English.

Last week, the FHFA abandoned that effort; instead, the language question will be included on a form that lenders may choose to use.

Credit union trade groups said they were pleased with the decision.

NAFCU Executive Vice President and General Counsel Carrie Hunt said the trade group supports efforts to help creditworthy borrowers in underserved areas achieve home ownership.

She added, “If included on the [application], the preferred language question could pose legal and cost-related complications for credit unions and their members and slow down the home buying process.”

Mitria Wilson, CUNA’s senior director of advocacy and counsel said, “We are grateful that the Federal Housing Finance Agency has reconsidered the inclusion of this question after recognizing the numerous compliance and other legal concerns raised by CUNA and other trade organizations.”

However, consumer groups, including the NAACP, the Center for Responsible Lending and Americans for Financial Reform, blasted the decision.

“We are deeply disappointed that FHFA has suddenly decided to reverse course and set aside the thoughtful, inclusive, multi-year process that led to the decision to add a language preference question to the URLA.”  said Linda Jun, senior policy Counsel at the Americans for Financial Reform Education Fund.

The groups said that the FHFA had conducted research on the issue and reviewed more than 200 comments before making its original decision.

The coalition said that during the financial crisis, several consumer groups were contacted by borrowers who faced foreclosure simply because of problems related to language barriers.

“Language barriers continue to limit consumers’ access to affordable homeownership opportunities and hinder lenders’ ability to serve this market effectively,” the groups said.

They added that the FHFA decision was arbitrary and was not supported by the extensive record the agency has developed on the issue.