Housing agencies need guidance on navigating artificial intelligence, an oversight committee told the Federal Housing Finance Agency. Improved guidance will allow for a better experience for prospective homebuyers.
The U.S Government Accountability Office has asked the Federal Housing Finance Agency to guide Fannie Mae and Freddie Mac on how the agencies should incorporate artificial intelligence. It recommended guidance regarding online real estate platforms, automated valuation models, automated underwriting systems and digital closing forms. The agency based its recommendation on research that the office published in its Property Technology for Homebuying: Products Present Benefits and Risks Amid Evolving Federal Oversight report.
The nonpartisan GAO provides oversight and accountability efforts to the federal government. The FHFA has been in conservatorship over Fannie and Freddie Mac since the Great Recession. Fannie Mae and Freddie Mac buy mortgages from banks and other lenders, then bundle those loans into mortgage-backed securities that can be sold to investors.
"The recommendation comes from the fact that Fannie and Freddie are such a huge part of the housing market and FHFA has a responsibility to oversee them with fair lending and consumer protection goals," said Alicia Puente Cackley, director of financial markets and community investment at the GAO. "If Fannie and Freddie have good guidance, then the consumers can have more confidence that the products are being used responsibly and that the risk of bias or discrimination are minimized."
The FHFA declined to comment, and the GAO has no enforcement powers.
The recommendation from GAO follows a request from Senators Elizabeth Warren (D-Mass.) and Maxine Waters (D-Calif.) to examine how artificial intelligence is influencing the homebuying process.