At the 2019 Winter Meeting in Miami, Florida, the Housing Finance Subcommittee sponsored a panel presentation titled: “LEP: Piecing the Puzzle Together.” The panel consisted of Jacqueline Ledon, a partner with the law firm J.Muir & Associates in Miami, Florida, Elizabeth Kemp, Associate General Counsel at Fannie Mae in Washington, D.C., and Tobias Moon, a partner with the law firm Husch Blackwell LLP in Dallas, Texas. The panel was moderated by Fed Kamensky, a member of the law firm Weiner Brodsky Kider PC in Washington, D.C. The panel addressed issues arising in consumer credit transactions with consumers who have limited English proficiency (“LEP”). LEP generally means that an individual does not speak English as his or her primary language, and has a limited ability to read, speak, write and understand English.
he panel began by discussing the legal landscape at the federal level. Executive Order 13166, which was issued in 2000, required federal agencies to examine the services they provide, identify any need for services to LEP persons, and develop and implement a system to provide those services so LEP persons can have meaningful access to them. According to the panel, these simply-stated requirements of the original Executive Order still serve as a good guide of the general expectations that consumer finance companies should have with respect to LEP consumers. The Truth in Lending Act, the Equal Credit Opportunity Act (“ECOA”) and the Electronic Funds Transfer Act were identified as the chief federal laws that impose requirements with respect to transactions involving LEP consumers. The federal government has a dedicated website, https://www.lep.gov, that provides helpful information regarding LEP issues.
The panel also highlighted LEP legal issues at the state level. California and Oregon were cited as examples of states with laws that impose certain obligations on consumer finance companies where the companies communicate, solicit or negotiate transactions primarily in certain foreign languages. The panel also highlighted a New York mortgage law as a likely model for other states. New York requires a 90-day mortgage foreclosure notice, and if the creditor has reason to believe that the borrower primarily speaks one of several foreign languages, and has a preference to speak in that foreign language, then the 90-day notice must be provided in that foreign language.
Next the panel discussed LEP issues in the context of Consumer Financial Protection Bureau (“CFPB”) supervision. The panel considered it the “new norm” for examiners to assess LEP compliance. CFPB examinations of mortgage companies often include a questionnaire including questions regarding LEP compliance, including how the company identifies LEP consumers, whether the company provides options for communicating in a foreign language, and if so, how the company handles such transactions. The CFPB also usually inquires as to whether and which personnel are capable of providing assistance in a foreign language. The CFPB will look for a strong compliance management system (e.g., policies, training, monitoring, testing, etc.), and will also usually request details regarding how documents are translated. In the panel’s view, a good compliance management system will ensure that the company can meaningfully interact with LEP consumers.
The CFPB has encouraged consumer finance companies to provide assistance to LEP consumers, and has issued guidance outlining certain LEP practices that are acceptable. For example, where a company markets in a foreign language, certain of the transaction documents and disclosures should be translated into that foreign language. The panel also highlighted several CFPB enforcement actions with LEP issues. One action dealt with deceptive practices in the telemarketing of credit card add-on products to Spanish speakers in Puerto Rico. The marketing calls were conducted in Spanish, but all of the disclosures and other legal documents were provided in English. The CFPB alleged that that this was deceptive and prevented consumers from gaining the full benefit of products. In another enforcement action, the CFPB alleged that a consumer finance company violated the ECOA by excluding Spanish speakers from its credit offer.
The panel also warned about fair lending risks, noting a close nexus between LEP status and race and national origin, both of which are prohibited bases for discriminating under the ECOA. Indeed, in a 2016 report the Department of Housing and Urban Development stated that LEP status can be viewed as a quasi-protected class.
Finally, the panel discussed LEP issues with the Federal Housing Finance Administration (“FHFA”), which regulates Fannie Mae and Freddie Mae. The FHFA recently approved a new uniform residential loan application (“URLA”), which includes a borrower question that asks for the borrower’s preferred language. To quell concerns about potential ECOA issues with the new URLA question, the CFPB issued guidance stating that use of the new URLA does not violate the ECOA.