Limited-English homeowners often face mortgage problems
A Spanish-speaking Rochester homeowner who lost his job and was going through a divorce almost put his home up for sale after it went into foreclosure because he didn’t know he could apply for loan modifications to avoid losing it.
His case is typical of the travails many limited-English homeowners experience because they don’t know what a loan modification is, much less how to apply for one.
An estimated 25.3 million U.S. residents — including 5.6 million New Yorkers — have limited English proficiency, say advocates for housing assistance programs.
Unnecessary foreclosures are among the dilemmas limited-English homeowners can face, said Brian Simmonds Marshall, policy counsel for Americans for Financial Reform. His organization recently issued a report on the issue.
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Some limited-English homeowners end up paying penalties or other fees because of misunderstandings, the study found.
Mortgage lenders frequently market their loans in the borrower's native language, the report said. But “once a product had been sold, consumers typically receive follow-up communications — including complicated mortgage options and terms — exclusively in English.’’
Many limited-English homeowners “are unable to fully comprehend the terms of their original mortgages due to the lack of translation services,’’ according to Americans for Financial Reform. These borrowers “enter into mortgages without understanding all the terms of the contract and only know the monthly payment to make.’’
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The Rochester man who almost sold his home worked with Marlene Cortes, a bilingual paralegal, and attorney Fiona Wolfe at the Empire Justice Center, who helped him modify his loan to a 33-year fixed-rate mortgage with a monthly payment he could afford. The center is not releasing the man's name, citing attorney-client confidentiality.
“He’s been in the U.S. for 15-plus years,’’ Cortes said. “He can have some conversational English, but when it comes to mortgage documents, it’s a little beyond what he can comprehend.’’
Their Rochester client, for example, misunderstood the process of getting a certified bank check and wasn’t clear about where he should be mailing his monthly mortgage payments. He also was mystified when a complete new set of forms was mailed to him by a state agency that was identical to the ones he already had completed. It turned out to be a computer-generated mailing the homeowner was told he could ignore.
Wolfe said that mortgage documents in general can be daunting even if English is your first language.
The national report cited other examples in which homeowners' names were withheld.
One Arabic-speaking borrower from upstate New York faced foreclosure because the automatic mortgage payments from his account had stopped and he was unable to get his mortgage service company to clearly explain why.
Another homeowner tried to explain her reason for defaulting on a mortgage, but her letter was rejected by the lender because it was written in Spanish.
A hard-of-hearing homeowner in Florida was denied American Sign Language services when he attempted to refinance his mortgage. The housing advocate who worked with him said the man had limited ability to read standard English because American Sign Language has different rules of grammar and syntax.
The housing advocates involved in the report have asked the federal Consumer Financial Protection Bureau to issue new rules advising lenders to offer multiple language services and a glossary explaining various mortgage-related terms, such as escrow.
The existing servicing rule for mortgages does not mandate translation requirements for borrowers with limited English proficiency.
The federal agency is exploring the issues, spokesman Sam Gilford said in an email.
btumulty@gannett.com
Brian Tumulty is a Washington correspondent for USA TODAY.