TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/1484258
30 | M R EP O RT FEATURE W e've entered a brave new world in mortgage lending over the past year. Refinance volume is gone, likely not to be heard from for some time. Lenders and mortgage businesses are reconfig- uring their operations to bolster against margin compression. And decision-makers are scouring the landscape for new and/or im- proved sources of revenue. As origination volume declines, that search includes the consid- eration of new or underserved markets. We've heard quite a bit about further penetrating the millennial homebuyer segment. We've also observed a more than a few mortgage lenders ramping up campaigns for niche products such as non-QM mortgages or 40- year loans. And yet, as the orig- ination world moves to recoup some of its lost refinance-based revenue, there's an entire market left virtually untapped. There were at least 61.6 million individuals in the U.S. (both foreign and U.S. born) who spoke a language other than English in the home in 2013. While some spoke English fluently, roughly 41% (25.1 million) were considered Limited English Proficient (LEP), meaning they reported speaking English less than "very well." Those numbers, by all accounts, have grown since the data was collected, and will only continue to grow in the coming years. There is no evidence to suggest that LEP adults are disinclined to purchase homes, making this a prime market segment for poten- tial new clients. America's LEP population is also drawing the attention of regulators and lawmakers as well. Earlier this year, the Federal Housing Finance Agency (FHFA) implemented a require- ment that mortgage lenders the Supplemental Consumer Information Form (SCIF) in their loan packets in order for those mortgages to be eligible for sale to the GSEs. The SCIF, in essence, reports a potential borrower's lan- guage preference. The Consumer Financial Protection Bureau (CFPB) has also clearly conveyed it would like to see more LEP services made available in the mortgage servicing and lending sectors. Further activity at the level of several states, in com- bination with the signals at the federal level, strongly suggests that mortgage lenders may soon have compliance incentive to provide more comprehensive language resources for LEP consumers as well. Whether driven by potential compliance or market potential, it's becoming clear that originators have incentives to review and build up their LEP resources and programs. In far too many cases, it's apparent that much more work needs to be done if sustain- able success is to be expected. More LEP Resources I t starts, of course, with making adequate resources available to potential LEP borrowers. Does the lender's website or app make application instructions, FAQs, and other educational materials, or even loan documents, available in languages other than English? For brick-and-mortar mortgage lenders, do your consumer-facing specialists, LOs, and branch repre- sentatives have a means by which to clearly communicate with non-English prospects, as well as materials those applicants can refer to throughout the process? Does the lender have sufficient means to even identify which of its prospects or applicants are LEP, and protocols for making LEP borrowers aware of such resources? Being LEP-friendly doesn't just stop at the technol- ogy level, either. The mortgage process, while moving towards increased automation, is still re- Planning for Sustainable Success in the LEP Market Non-English-speaking borrowers remain an underserved market and potential revenue source. But lenders seeking to serve that market need to first consider several things. By George Baker