
There's a comment describing the intended behaviour: templates without a specified name_type should use a name from the default names list. I've tracked the issue down to the sim_spawner.py. Japanese is the default name_type category which is probably why those names appear more often than the others. For whatever reason the game doesn't use the default names list as it should. CL added a name_type field with all of the ethnic names categorised as either Japanese, Moroccan, or Indian and the CL templates make use of it. Whenever an NPC is generated it uses one of those names, regardless of appearance and ethnicity. The second issue is that Japanese (sometimes Moroccan or Indian) names are used for all non-HH generated Sims. Remember how single mom households used to be the only thing that generated in the base game? I think it's the same thing happening here. This might be related to an existing issue with the game, where it only ever uses one or two out of dozens of possible HH templates.

They generate properly using CL assets and names but only these particular templates are ever used by the game. The first is that with City Living installed only ethnic sim templates are used for homeless households (HH).

It actually seems to be two separate issues: It's funny you should post this, since I have been doing a bit of digging into this in the past couple of days.
