The question of whether AI can piece together and glue the consistently stretching racial disparity homeownership gap or could worsen it is the result of the recent research paper, “Harnessing AI for Equity in Mortgage Finance,” which was collaboratively caret by the Urban Institute and the Federal Home Loan Bank of San Francisco.
The new report has inputs from almost 50 people involved in the federal government, mortgage lending, consumer advocacy, financial technology, mortgage lending, and research organizations.
Among the findings or the results, there was the uneven adoption of artificial intelligence across the mortgage finance industry, with lenders of larger mortgage, fintech firms, and enterprises sponsored by the government already implementing the new technology into their operations.
Smaller and mission-related lenders like community development financial institutions and minority depository institutions have a conspicuously lower adoption level.
According to their research and discoveries in the mortgage finance ecosystem, the authors of the reports have put forward recommendations related to how AI can cause more damage than bring rewards.
They requested more regulatory guidance to set up clear guidelines on applications and protect consumer rights, the design of artificial intelligence for establishing clear procedures, the design of AI models to make sure algorithms are not biased and are baked on equality, and the launch of pilot test models for guaranteeing that their outputs supported equity in home ownership, and were consistent.
“AI and the potential disruption in its wake have been the subject of many conversations, and this latest paper underlines the importance of getting ahead of the technology and harnessing it to advance equitable outcomes in our society,”
said Janneke Ratcliffe, vice president of the Housing Finance Policy Center at the Urban Institute.
“We cannot afford to wait and see how stakeholders will implement AI in their processes; we should act now to establish guidelines and guardrails to ensure that Black and Latino households are supported in their pursuit of homeownership.”
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