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
- 2025 State AI Legislative Activity (As of March 18th)
- 2025 State AI Regulatory Activity:
- 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.
- February 18, 2025: MBA submits joint comments with California MBA and California Bankers Association in response to the CPPA proposed rule.
Related MBA Events
AI on Trial: Fair Lending, Compliance, and the Fight for Transparency in Mortgage Lending
Artificial Intelligence (AI) is transforming mortgage lending, accelerating efficiency and decision-making. However, its adoption introduces a critical challenge—transparency. In a heavily regulated industry, lenders must justify credit decisions to
Artificial Intelligence (AI) is transforming mortgage lending, accelerating efficiency and decision-making. However, its adoption introduces a critical challenge—transparency. In a heavily regulated industry, lenders must justify credit decisions to borrowers and regulators while ensuring AI models remain fair, accountable, and compliant.
Explainable AI (XAI) bridges the gap between AI-driven innovation and the need for interpretability, risk mitigation, and regulatory compliance. In this webinar we will explore how lenders can integrate XAI into underwriting, risk modeling, and fraud detection—enhancing transparency without sacrificing competitive advantage.
Date/Time:
- Wednesday, July 9 (2:00 PM - 3:00 PM ET)
Objectives:
- Understand why XAI is essential for regulatory compliance and AI-driven mortgage lending
- Learn how XAI reduces bias, enhances accuracy, and fosters borrower trust
- Explore key tools (e.g., SHAP, LIME) that make AI-driven decisions transparent and defensible
- Examine real-world use cases where lenders have successfully implemented XAI
- Anticipate emerging AI regulations and best practices for compliance
Experience Level:
- Entry-Level
- Intermediate
Target Audience:
- Mortgage Executives
- Compliance Officers
- Risk Managers
- Technology Leaders
Speaker(s):
- Ruth Lee, President, Executive Business Consultant, Big Think
- Lanette Martin, Counsel, Mitchell Sandler
- Marty Green, Principal and Attorney, Polunsky Beitel Green
- Heather Guidry, SVP, Fair Lending and Responsible Banking Officer, First Financial Bank
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.
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