In light of rescinded supervisory and compliance guidance related to fair lending laws by the Trump Administration, the Government Accountability Office (GAO) is calling on the Federal Housing Finance Agency (FHFA) to provide written guidance on how the government-sponsored enterprises (GSEs) are complying with fair lending rules, and how the FHFA will supervise this compliance.
Noting that the regulatory environment related to fair lending and property technology “has been changing,” the GAO, the investigative arm of Congress, says Fannie Mae and Freddie Mac need guidance to carry out the fair lending aspects of their mission. To date, the FHFA has not responded to the report, either yeah or nay.
The GAO was asked to study the impact of technology in the homebuying process, specifically the use of “selected” automated products, their benefits and risks, and agency oversight of compliance with fair lending and relevant consumer protection laws. It focused on online platforms selected for their use at different stages of the homebuying process.
It found that digital real estate tools can streamline the process, from house shopping online to getting a mortgage approved faster. But these property technologies also carry risks, the GAO said, specifically making it more difficult to comply with fair lending laws.
With the exception of the FHFA, which is the GSEs’ conservator, agency oversight generally has not focused specifically on technology-based products, the report noted.
The FHFA has conducted examinations specifically focused on products such as automated mortgage underwriting systems and automated valuation models. The Consumer Financial Protection Bureau’s (CFPB) examinations of mortgage lenders “could involve” lenders’ use of technology but have not been product-focused.
The other three agencies in GAO’s review — the U.S. Department of Housing & Urban Development (HUD), Veterans Administration (VA), and the Federal Trade Commission (FTC) — generally have not conducted product-specific oversight.
Earlier this year, the FHFA began implementing new priorities and responding to executive orders directing changes to certain policies and programs. FHFA made changes to its fair lending oversight program, including changing its examination approach, waiving components of its fair lending rule and rescinding related guidance.
“Although the enterprises remain subject to fair lending and other consumer protection laws,” the GAO found, the “FHFA has not communicated its revised compliance requirements or supervisory expectations.
“Given the extent of FHFA’s changes, providing additional written direction for the enterprises on the changes would help ensure the enterprises clearly understand FHFA’s compliance requirements and its supervisory expectations.
Its recommendation, the agency said, “would help to ensure that the enterprises appropriately carry out requirements, which are intended to help promote sustainable housing opportunities for underserved communities.”
