Mortgage providers insisted on building AI -rendering foundations

Officially known as SB 24-205The law is aimed at regulating the development and deployment of AI systems in the state, in particular those as ‘high risk’.

It is currently undergoing regulations and is expected to become a precedent for other states. The efforts to pass on a moratorium on AI use in the mortgage room were not successful, but the regulatory environment remains fluent.

“Risk assessment in the AI era differs fundamentally from the pre-AI environment,” said Lee, and noticed that AI systems evolve daily, while most mortgage compliance processes remain very manual. Lenders, Servicers and Capital Markets Teams must consider automating compliance tools from the start of the AI adoption, instead of treating it as a side issue.

Lee advised to set up an AI Governance Committee with direct access to the board and the possibility to meet more than every quarter. These groups must document both positive and negative test results and be agile enough to respond quickly to emerging problems.

Brown said that supplier Due Diligence is a different priority. Companies that build their own AI can control the roll -out pace more effectively, but those who buy third -party tools must examine contracts, avoid overly long conditions and “know your developer” to anticipate product changes.

Both speakers have advised to include legal and compliance risks in return on investments (ROI) models. “It’s not just about the cheapest model per token,” said Lee. “Does that model help you manage compliance and exposure to regulations?”

In the field of regulatory front, Lee said that federal priority efforts are being discussed, but states are expected to continue to promote their own AI and data privacy laws. More than 1,000 accounts have been introduced nationally, she said.

To prevent innovation, Brown and Lee said that lenders must tailor legal and compliance teams to business goals and acceptable risk levels from the start. Involving these professionals in the AI strategy, instead of as a final checkpoint, can speed up the safe acceptance.

“This is happening now,” said Lee. “The revolution is here and everyone in mortgage must be informed quickly.”