The Federal Housing Administration (FHA) published Mortgagee Letter (ML) 2023-13 this week, which requires the use of a form that allows borrowers to voluntarily state their language preferences and provide information on any housing counseling and homeownership education they received.
The form, the Fannie Mae/Freddie Mac Form 1103, is known as the Supplemental Consumer Information Form (SCIF). It will be required for all FHA loan applications issued on or after August 28, 2023.
“Requiring the SCIF can inform a lender or mortgage servicer’s provision of services in languages other than English and in accordance with a borrower’s understanding of the homebuying and mortgage lending processes,” the FHA said in an announcement.
Collecting the information specified in the SCIF will allow the FHA to “enable a better aggregate view of language preferences for the borrowers it serves, which in turn will influence its future actions to continue breaking down language and other barriers to homeownership,” according to the announcement.
Lenders working with borrowers on FHA Title II forward mortgage financing will be required to present the SCIF during the application process.
“The SCIF has already been adopted for conventional mortgages and we believe that its use is even more important for FHA-insured mortgages, given FHA’s outsized role in providing access to mortgage financing for underserved populations,” HUD Deputy Assistant Secretary for Single Family Housing Sarah Edelman said in the announcement. “This announcement complements the work we recently completed to provide translated versions of mortgage documents and homebuyer education resources.”
The National Consumer Law Center (NCLC) applauded the move by the FHA, noting that it will help level the playing field in terms of access to FHA financing.
“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,” Alys Cohen, senior attorney at NCLC, said in a statement. “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 step toward serving borrowers who have limited English proficiency (LEP), added Nicole Cabañez, Skadden Fellow at NCLC.
“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,” Cabañez said. “We urge FHA to continue reducing barriers to the mortgage market for LEP homeowners.”
