Improving Access for Limited English Proficiency Borrowers

Litigation

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Due to the United States’ increasingly diverse population, offering loan services and products to borrowers with limited English proficiency (LEP) is a huge business opportunity for lenders.

More than one-fifth of U.S. residents spoke a non-English language at home in 2018, according to an analysis of Census Bureau data by the Center for Immigration Studies. In California, residents are even more likely to speak a foreign language — 45% of Californians spoke a non-English language at home in 2018, and as many as 1 in 4 Californians reported speaking English “less than very well” in the 2015 Census.

In this environment, lenders could ideally offer a seamless lending experience in a foreign language, but that is not always possible. At a minimum, they must be aware of potential cultural barriers and regulatory guidance for offering LEP products and services, so they can craft a thoughtful approach to serve local borrowers in a manner that is accessible, fair, and responsible.

This approach should begin with marketing. When marketing to borrowers in a non-English language, lenders should be careful to use consistent terminology that aligns with English marketing materials, including disclosure statements. Lenders are also required by law to make disclosures in the same language as the advertisements. Lenders should note in advance if loan documents can only be provided in English to avoid engaging borrowers in an inaccessible process. 

At the negotiation stage, lenders in California are legally required to provide a copy of the loan agreement and translations of terms if discussions primarily occurred in Spanish, Chinese, Tagalog, Vietnamese, or Korean, but these requirements vary by state. 

Even after closing, the lender’s responsibility to maintain accessibility for LEP borrowers does not end. For example, if loan servicing discussions occur in English after the origination process occurred in Tagalog, lenders could be subject to unfairness claims. While legal requirements for LEP loan servicing also differ by state, California requires any discussions about modifying the loan agreement in Spanish, Chinese, Tagalog, Vietnamese, or Korean to be documented in the same language.

Key Takeaway

While clear federal and state guidance may not be available for LEP loans, offering services and products in non-English languages is in demand in many areas of the U.S. To meet this need and avoid liability, lenders should carefully evaluate risks and develop an LEP lending plan to ensure they are offering accessible, fair, and responsible services for local borrowers.

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