The Federal Housing Finance Agency on Monday announced the launch of Mortgage Translations, an online resource for mortgage industry professionals who serve limited English proficiency borrowers. The new site includes a Spanish-English dictionary, mortgage applications and educational materials.
Chinese, Vietnamese, Korean, and Tagalog translations will become available in the coming years, according to an announcement issued Monday, but the agency chose to focus first on Spanish-speaking borrowers, who make up 60 percent of the limited English proficiency community.
“FHFA is proud to collaborate with Freddie Mac and Fannie Mae and so many others on this important initiative to help address language barriers that impede access to mortgage credit,” said FHFA Chief of Staff Janell Byrd-Chichester in a statement.
Byrd-Chichester says Mortgage Translations is a critical step in the agency’s Language Access Multi-Year Plan, which aims to make the mortgage process easier for the nation’s 5.3 million limited English proficiency households.
In addition to Mortgage Translations, the Language Access Multi-Year Plan includes:
*The formation of a think tank for representatives from the housing industry and consumer organizations who work with limited English proficiency households.
+The development of a new disclosure that helps LEP households understand that not all communications during the mortgage process will be in their preferred language.
+The creation of glossaries that include translations for common real estate and mortgage terms.
+The translation of Fannie Mae’s Uniform Residential Loan Application.
+The launch of a language access line that provides on-the-spot assistance from multi-lingual housing counselors.
“Freddie Mac is pleased to work with FHFA and Fannie Mae on this language access multi-year plan, as it demonstrates our commitment to help make home possible for today’s borrower and the borrower of the future,” added Freddie Mac SVP of single-family affordable lending and access to credit Danny Gardner.
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According to an independent study by The Urban Institute, there is a correlation between a zip code’s English proficiency rate and homeownership rate. When controlling for other homeownership factors such as ethnicity, race, age and income, zip codes with the highest share of limited English proficiency residents have homeownership rates that are 5 percentage points below zip codes with a median share of limited English proficiency residents.
The study’s authors said programs like Mortgage Translations can help close the gap, alongside financial institutions that serve specific groups and an overall credit expansion that would allow LEP borrowers to submit alternative data since they likely haven’t built a credit profile in the United States.
“Lenders might not offer all services in every language, but there are ways to help limited English proficiency households, such as expanding the availability and knowledge of culturally accessible Spanish-language materials,” read the report.
“Other solutions that could enhance homeownership opportunities include employing more Spanish-speaking loan officers and making changes to underwriting, such as giving greater consideration to multigeneration families by counting more of the income of household members not on the mortgage in underwriting the mortgage.”