WASHINGTON—The Federal Housing Finance Agency (FHFA) announced that it would be adding a preferred language question to the redesigned Uniform Residential Loan Application (URLA) that will be mandatory for government-sponsored enterprise loans beginning in February 2020.
Fannie Mae and Freddie Mac are due to publish the final redesigned URLA later this year. Lenders may begin using the redesigned URLA in July 2019.
The FHFA said the question will enable borrowers who prefer to communicate in a language other than English to state their preference. "It also provides clear disclosures that the mortgage transaction is likely to be conducted in English and that language resources may not be available," the agency said.
The addition of this question is part of a multi-year plan for the GSEs that will improve access to mortgage credit for limited English proficiency borrowers, NAFCU noted in its analysis. In comments to the FHFA in July, NAFCU said that while it supports better access to mortgage credit for creditworthy borrowers, it was concerned about potential costs and legal issues that could arise from such a question.
The FHFA's announcement said it has added disclosure language to the question to mitigate legal concerns raised by lenders – including credit unions. The agency also said the question will set borrower expectations about available language services and inform borrowers about other language access resources, NAFCU noted. The GSEs will also publish a separate disclosure translated into several languages to further inform borrowers; use of this disclosure will be optional, the FHFA said.
This announcement also affects one of the effective dates in the CFPB's final rule amending Regulation B to create more flexibility and easier compliance with Home Mortgage Disclosure Act requirements. With the FHFA's release of this new question, the effective date for URLA form removal is February 2020; originally the compliance date was Jan. 1, 2022, NAFCU said.