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Recent comments by Rohit Chopra, Director of the Consumer
Financial Protection Bureau (CFPB), indicate that the Bureau
will begin to focus increasingly on the potential misuse of artificial
intelligence (AI) in lending decisions.
Specifically, Director Chopra has noted
that AI may result in "digital redlining" and
"robo-discrimination," previously stating that
he believed "black box underwriting algorithms
are not creating a more equal playing field and
only exacerbate the biases fed into them."
e CFPB's attention on AI arrives
against the backdrop of the technology gaining
significant momentum in mortgage lending.
According to Forbes (Dec '21), "83% of [lender]
executives report that AI is important to the
future of the industry."
While there are guardrails to be laid
down with respect to AI in mortgage lending,
we need to be careful here that government
regulators, CFPB included, do not become
a drag on the very thing most of our
policymakers and government leaders want:
mortgage financing available to families in need
of affordable, quality housing, thereby creating
more equitable homeownership.
TECHNOLOGICAL POTENTIAL
Supporters of AI, such as myself, believe
as a technology, it has the potential to deliver
more accurate decision-making in underwriting
and to increase the availability of credit to
those in need. e critics of AI, evidenced in
Chopra's comments, are skeptical of its data
accuracy, the potential for applicants to be
excluded, and the belief that AI underwriting
processes remain opaque. is line of reasoning
is curious to me given the opaqueness inherent
in manual underwriting decisions made by
Feature By: Dain Ehring
AI DECISION-
MAKING IN THE
CROSSHAIRS
With the CFPB turning its attention to the use of artificial intelligence within the mortgage process,
here's what you need to know.
