As artificial intelligence adoption accelerates across mortgage lending, a new compliance and governance battleground is beginning to emerge.
Brody | Gapp LLP announced the launch of its Mortgage AI Governance Audit Practice, alongside plans to publish The Mortgage Bankers AI Governance Guide in Q3 2026 — an initiative aimed at helping lenders navigate mounting regulatory expectations around AI deployment.
The announcement comes as Freddie Mac’s AI risk management requirements are already in effect and Fannie Mae’s new vendor AI oversight standards are scheduled to take effect Aug. 6, 2026.
The firm also revealed that Seattle-based mortgage technology company Friday Harbor has become the first mortgage technology provider to complete Brody | Gapp’s AI Governance Limited Attestation.
For originators and lenders increasingly using AI-powered tools throughout the origination process, the development signals that governance and compliance readiness may quickly become as important as the technology itself.
“On one side, binding AI governance requirements are already in effect at Freddie Mac, with Fannie Mae’s own set of requirements coming online in August,” said James W. Brody, founding and managing partner of Brody | Gapp. “On the other, very few lenders are positioned to produce defensible governance files today.”
According to the firm, the new audit practice evaluates AI systems across areas, including fair lending, adverse action requirements under Regulation B, model governance, vendor risk management, data governance, internal controls, and examination readiness.
AI-powered underwriting support tools, pricing engines, borrower engagement systems, and servicing technologies have proliferated rapidly across the industry over the past year. But while lenders have embraced efficiency gains, many institutions are still developing internal frameworks for documenting how these systems operate, how decisions are monitored, and how vendors are governed.
That gap is becoming increasingly important as regulators and the GSEs sharpen their focus on AI risk management.
Brody | Gapp said its forthcoming Mortgage Bankers AI Governance Guide is designed as a practical reference manual for mortgage institutions preparing for examinations, compliance reviews, litigation requests, and internal governance oversight.
“We built the Guide around what a compliance committee needs to produce when a demand letter, an examination request, a QC self-report, or a discovery production lands,” said Ronald Gapp Jr., founding partner at the firm.
The guide is expected to address AI governance issues across the mortgage lifecycle, with sections tailored to executives, compliance teams, secondary marketing leaders, legal departments, and operational stakeholders.
The audit practice was also developed with Marvin Chang, who serves as the firm’s senior fintech and AI advisor. Chang previously led digital transformation at Caliber Home Loans and currently serves as Executive in Residence for the fintech program at Duke University’s Pratt School of Engineering.
Friday Harbor’s completion of the firm’s Limited Attestation also serves as an early example of how mortgage technology vendors may increasingly seek third-party governance reviews to reassure lender clients.
Brody | Gapp said the attestation engagement evaluated Friday Harbor’s governance controls and examination readiness related to its AI-powered platform.
The development underscores Brody | Gapp’s growing role as one of the mortgage industry’s emerging legal and compliance voices on AI governance as lenders prepare for heightened scrutiny around AI deployment, vendor oversight, and examination readiness.
Brody | Gapp is a sponsor of the upcoming NMP Ignite AI Summit, which will focus on AI adoption, governance, compliance, and operational strategy across mortgage lending. More information and registration details are available at NMP Ignite.
