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A.I. Bias Caused 80% Of Black Mortgage Applicants To Be Denied

#artificialintelligence

Artificial Intelligence and its inherent bias seems to be an ongoing contributing factor in slowing minorities home loan approvals. An investigation by The Markup found lenders were more likely to deny home loans to people of color than to white people with similar financial characteristics. Specifically, 80% of Black applicants are more likely to be rejected, along with 40% of Latino applicants, and 70% of Native American applicants are likely to be denied. How detrimental is the secret bias hidden in mortgage algorithms? It's important to note that 45% of the country's largest mortgage lenders now offer online or app-based loan origination, as FinTech looks to play a major role in reducing bias in the home lending market, CultureBanx reported.


A.I. Bias Caused 80% Of Black Mortgage Applicants To Be Denied

#artificialintelligence

Artificial Intelligence and its inherent bias seems to be an ongoing contributing factor in slowing minorities home loan approvals. An investigation by The Markup found lenders were more likely to deny home loans to people of color than to white people with similar financial characteristics. Specifically, 80% of Black applicants are more likely to be rejected, along with 40% of Latino applicants, and 70% of Native American applicants are likely to be denied. How detrimental is the secret bias hidden in mortgage algorithms? It's important to note that 45% of the country's largest mortgage lenders now offer online or app-based loan origination, as FinTech looks to play a major role in reducing bias in the home lending market, CultureBanx reported.


AI Challenging Banks Lending Practices

Forbes - Tech

Artificial Intelligence may be pushing the limits of decision making. Banks that want to use AI still have to adhere to several industry specific rules primarily around transparency. Other industries like tech don't have the same hurdles to climb when it comes to regulation around there AI efforts. Rules for banks were put in place to protect poor and minority consumers, including laws which are supposed to ensure the equal treatment of customers. Are black people going to fall further behind in getting approved for loans and credit cards if banks start using AI for lending decisions?


Democrats Back a Bank Bill That Could Hurt Black Homebuyers

Slate

When 67 senators voted on Wednesday night to weaken the Dodd-Frank Act and ease rules across the banking industry, they also made it easier for banks to discriminate against black borrowers. A provision in the Economic Growth, Regulatory Relief, and Consumer Protection Act would exempt the large majority of mortgage lenders from key disclosure requirements that help the government identify racial discrimination and enforce fair housing laws. The provision would facilitate redlining, allowing lenders to deny loans to black homebuyers, while also giving lenders carte blanche to overcharge black homebuyers or steer them into the same predatory loans that exploded during the financial crisis, pushing countless families into foreclosure. Yet this bill, which would widen the already staggering racial wealth gap, won support from more than a dozen Democratic senators, including members such as Tim Kaine, Mark Warner, Claire McCaskill, and Doug Jones who rely on black and Hispanic voters to win elections. If not for the nearly unanimous support of black Virginians, for example, Sen. Mark Warner--a key advocate for the bill--would have almost certainly lost his re-election race to Ed Gillespie in 2014.


Preliminary Analysis of 2018 HMDA Data and ABA Policy Recommendations ABA Banking Journal

#artificialintelligence

On Aug. 30, the Federal Financial Institutions Examination Council made available data on mortgage lending transactions in 2018 as required by the Home Mortgage Disclosure Act. The HMDA data set provides important information on U.S. mortgage market activity and is an important tool for all stakeholders to consider how to enhance efforts to expand homeownership in their communities. Banks are in the business of making loans and want to provide safe and sound mortgages to as many qualified borrowers as possible. Since HMDA captures lending information across all populations, this data is beneficial to banks to assess how well they meet their customers' needs, to identify business opportunities, and most importantly, to detect possible trends that would suggest unfair treatment of any group, region or population. We hold as a fundamental tenet that race, ethnicity, or another prohibited basis should never factor into lending and pricing decisions.