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. MBA created a report exploring AI in the Mortgage Industry and a document outlining Myths vs. Facts about the industry's use of AI. 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.
ENACTED
Colorado: Consumer Protections for Artificial Intelligence (May 17, 2024)
- Rulemaking Updates: https://coag.gov/ai/
All Activity Related to State Artificial Intelligence Legislation
- January 8, 2025: New York prefiles a handful of artificial intelligence related bills. First, A 768 by Assembly member Bores is a similar broad approach to Colorado, but includes improved exemption language for technology approved, authorized, cleared, or granted by a federal agency or entity regulated by the Federal Housing Finance Agency (the GSEs) – as well as banks or CUs who are under similar or more stringent standards. New York also prefiled A 773, a bill specific to AI in lending, S 1169, another broad approach that goes further than Colorado’s law with timed disclosures and no industry or industry technology exemption, and A 222 which clarifies the use of chatbots or other AI does not shield the deployer from liability in financial or generalized harm to consumers.
- January 7, 2025: Virginia prefiles two broad artificial intelligence bills similar to Colorado’s law, HB 2046 & HB 2094. HB 2094 includes an industry technology exemption and exempts banks and credit unions under similar or more stringent requirements – while HB 2046 does not provide any exemption or acknowledgement of our industry’s current level of regulation on both anti-discrimination and the use of technology.
- December 23, 2024: Texas prefiles long awaited HB 1709 from Representative Capriglione who had previously shared a draft with all stakeholders. Texas MBA continues conversations with the Representatives office to include exemption language for our industry, if not key mortgage tech. This bill has a more narrow scope of technology included, but has the same approach as Colorado’s law with risk assessments, disclosures, and reporting.
- December 19, 2024: Texas prefiles SB 668 which requires disclosure of the use of artificial intelligence along with how the AI tool was trained. This is similar to last year’s California AB 2013, but it was not introduced specific to Generative AI.
- November 22, 2024: California's Consumer Privacy Protection Agency (CPPA) published proposed regulations regarding cybersecurity and automated decisionmaking technology (ADMT). Comments are due February 19th, 2025.
- State AI Leg & Reg Activity 2023-2024
Related MBA Events
National Advocacy Conference
Washington , USA
Capital Hilton
MBA’s National Advocacy Conference is the industry's annual legislative fly-in and the only event focused solely on advocating for real estate finance issues. Participation in NAC25, is a great way for us to share the collective impacts and benefits
MBA’s National Advocacy Conference is the industry's annual legislative fly-in and the only event focused solely on advocating for real estate finance issues. Participation in NAC25, is a great way for us to share the collective impacts and benefits on your business with members of your congressional delegation. Join us for an impressive speaker lineup including key decisionmakers and informative policy briefings, followed by scheduled meetings on Capitol Hill and additional attendee-activities, including a tailored Commercial/Multifamily track. A networking reception will be held on Tuesday evening to welcome you to Washington, D.C. at the Renwick Gallery of the Smithsonian American Art Museum located steps from the White House in the heart of historic federal Washington.
Who Should Attend
Anyone employed by an MBA-member company, including state association representatives who want to be a voice for the industry and help drive positive change. No prior advocacy experience needed. Single family, commercial and multifamily; loan production/origination, servicers, investors, and service providers to the industry.
William Kooper Discusses State Artificial Intelligence Advocacy Efforts
Join MISMO's Artificial Intelligence (AI) Community of Practice (CoP)
MISMO's AI CoP aims to bring together experts and practitioners to collaborate on advancing artificial intelligence standards in the mortgage industry. The AI CoP will also be a forum for industry professionals to stay informed on the latest AI trends and advancements that are transforming the mortgage landscape. Access MISMO Connect to join.
Leave a comment