MBA white paper urges unified AI framework for mortgage lenders

The The paper argues that while AI offers significant efficiency gains, the industry faces growing uncertainty about regulatory expectations and legal compliance.

The paper, prepared for the MBA by law firm Orrick, Herrington & Sutcliffe, examines how existing federal laws apply to AI-powered mortgage lending and outlines best practices for lenders that adopt the technology. It also provides an up-to-date overview of MBA members’ engagement and implementation around AI use and regulation, while also posing and analyzing key legal questions about the use of AI.

“AI’s assistance with — and, in some cases, performance of — a broader range of mortgage-related tasks raises novel questions about expectations for human involvement with AI models, as well as risk management more broadly,” the report explained.

SAFE Act ambiguity

MBA noted that mortgage companies are increasingly exploring generative AI, predictive AI and agentic AI systems, with many lenders already using AI-powered chatbots to answer simple questions or “While it does require human MLOs to be licensed or registered (depending on the nature of their employment), the SAFE Act does not require AI tools to have their own MLO license or registration to engage in loan origination activities,” the report reads.

MBA argued that current federal disclosure requirements effectively require lenders to assign a human mortgage originator to every transaction. Under the Truth in Lending Act and Regulation Z, lenders must disclose the name and Nationwide Multistate Licensing System (MBA said The association said lenders should prepare for evolving regulatory expectations while also engaging with lawmakers and regulators as