The Federal Housing Administration (FHA) announced Tuesday that it will require lenders making FHA-insured mortgage loans to ask borrowers for their language preference.
FHA said it will require lenders to use the Fannie Mae/ Freddie Mac Supplementary Consumer Information Form (SCIF) to collect a mortgage applicant’s language preference. Using the form will enable lenders to make information available in the languages that borrowers will understand best, the agency said..
Earlier this month, FHA also launched its new language access web page, which provides translations of key FHA mortgage documents in the top five languages most commonly spoken by borrowers with limited English proficiency (LEP).
“We applaud FHA’s leadership for recognizing how crucial language access is to reducing barriers to homeownership for millions of hardworking families in populations that have been underserved by FHA financing,” said Alys Cohen, senior attorney at the National Consumer Law Center. “FHA is a crucial source of mortgage credit in underserved communities, and collecting language preference will expand FHA’s reach and help borrowers gain access to essential information in their preferred language.”
“Identifying language preference is an important first step toward serving borrowers with limited English proficiency,” said Nicole Cabañez, Skadden Fellow at the National Consumer Law Center. “We celebrate this tool for allowing borrowers to express their language needs in an efficient, systematic way, while also recognizing that lenders and servicers also must be required, not merely encouraged, to respond to the needs of LEP consumers with concrete steps to increase access to written and oral assistance.We urge FHA to continue reducing barriers to the mortgage market for LEP homeowners.”
The SCIF (Fannie Mae/Freddie Mac Form 1103) is used during the mortgage application process to allow borrowers to voluntarily identify language preferences and provide information on housing counseling and homeownership education they may have received. Borrowers may choose to provide all, some, or none of the information requested on the form. The SCIF will now be required for loan applications dated on or after Aug. 28, 2023.
FHA’s announcement follows the Federal Housing Finance Agency’s (FHFA) decision to require language preference data collection through the SCIF as of March 1, which it proposed in April to codify as a regulation.
FHFA publishes the SCIF in English, Spanish, Chinese, Korean, Vietnamese, and Tagalog.
FHFA also published a study from the Kleimann Group to identify major barriers for LEP borrowers in accessing mortgage credit, and created a Mortgage Translations Clearinghouse for common origination and servicing documents.
