On April 8, Fannie Mae issued the following statement: lender letter Establishing a governance framework for seller/servicer use of AI and machine learning (AI/ML) in mortgage origination and servicing operations. The framework will become effective 120 days after publication and will require sellers/servicers that use AI/ML in connection with the origination of loans sold or guaranteed by Fannie Mae, or the servicing of loans on behalf of Fannie Mae, to comply with applicable laws and lender agreements. Seller/Servicer must maintain policies and procedures governing AI/ML systems, including risk management. Such a policy must meet at least the following conditions: (i) be transparent and communicated to appropriate personnel; (ii) incorporate trustworthy and ethical AI/ML characteristics; (iii) reflect an understanding of legal and regulatory requirements; (iv) Align with the lender’s risk tolerance. (v) be reviewed at least annually to ensure compliance with applicable laws and consistency with industry best practices;
In addition, the seller/servicer must comply with Fannie Mae regulations. Information Security and Business Resilience Supplement and ensure that the use of AI/ML by subcontractors and vendors is subject to “protected” governance similar to framework requirements. Additionally, the Loan Document provides that, upon request, the Seller/Servicer must promptly disclose to Fannie Mae the type of AI/ML used, the purpose and method of its use, the safeguards put in place to mitigate AI/ML-related risks, and any other information Fannie Mae may request.
[View source.]
