CUNA raises legal, compliance issues with URLA change
CUNA joined with several other trade organizations this week to raise compliance and legal concerns with the Federal Housing Finance Agency’s (FHFA) potential change to the new Uniform Residential Loan Application (URLA). The change would add a question asking borrowers to indicate their language preference.
“While we support a range of efforts to ensure that borrowers are well informed during the mortgage process, the inclusion of such a question on the redesigned form raises several serious compliance and legal concerns that strongly weigh against including it on the form or, at the very least, warrant a full vetting through a notice and comment process before its inclusion,” the letter reads.
Specifically, CUNA and the other organizations believe a language question on the URLA would:
Require lenders to ask borrowers sensitive questions before the interactions and implications of other rules are understood and addressed;
- Create expectations among consumers that can’t be met, as consumers will reasonably expect they will receive communications in the listed language;
Provide an inferior means of obtaining and analyzing data;
Detract from other more promising avenues, such as the FHFA working with other federal agencies to determine a government-wide approach to limited-English proficiency consumers in the marketplace;
Potentially expose lenders to liability if the borrower indicates a non-English preference and the lender does not proceed in that language. This could potentially expose lenders to Unfair, Deceptive and Abusive Acts and Practices liability;
Open both lenders and borrowers to considerable origination costs if the lender believes it is expected to obtain translation services;
Open servicers to new obligations and increase borrowers’ servicing costs; and
- Require translations services without accompanying government or government-sponsored enterprise materials.
The letter, addressed to FHFA Director Mel Watt, was also signed by the American Bankers Association, Consumer Bankers Association, Consumer Mortgage Coalition, Housing Policy Council, Independent Community Bankers of America, Mortgage Bankers Association and National Association of Federal Credit Unions.