State Artificial Intelligence Law and the Real Estate Finance Industry

In the absence of Congressional action, states have begun debating how to regulate artificial intelligence (AI) in earnest with legislative efforts broadly aimed across industries. In May 2024, Colorado became the first state to enact a statute governing these tools. MBA and its partner state and local associations are engaged in advocacy to ensure the specific needs of the real estate finance industry are considered in these debates and incorporated into any final policy.

Educating state legislator's on the use and purpose of these technologies is key to ensuring these policies do not interfere with the overall mortgage market. For example, member companies often rely on AI tools they do not own nor control in order to extend sustainable mortgage credit to low- and moderate-income families through the affordable housing programs of the federal government. This includes AI tools developed or required by Fannie Mae, Freddie Mac, the Federal Housing Administration, the Department of Agriculture's Rural Housing Service, and the Veterans Administration's Loan Guarantee Program.

Given the reliance on federal tools, it is vital that state policy makers continue to allow their federal counterparts to manage these systems and not create any unintended consequences through a patchwork of state laws. 

For more information about AI in the mortgage industry, please review: 

• Examining AI-Powered Mortgage Through the Lens of Federal Law
• AI in the Mortgage Industry
• Myths vs. Facts about the industry's use of AI
• MISMO's Framework for Responsible Artificial Intelligence in Mortgage Ecosystems (FRAME)