US mortgage approval algorithm racial discrimination
Occurred: August 2021
An investigation has found that mortgage lenders are much more likely to turn down Latino, Asian, Native American and Black applicants than White ones.
A Markup assessment of mortgage data, co-published by the AP, discovered that mortgage loan applicants of colour were 40%–80% more likely to be denied than their White counterparts across the US, and that the disparity was greater than 250% in some urban areas.
The algorithms used by lenders are mostly mandated by Freddie Mac and Fannie Mae, whose own underwriting algorithms are a closely held secret.
The Markup's investigation was cited as a reason for the introduction of the US Algorithmic Accountability Act of 2022.
Operator: Freddie Mac; Fannie Mae
Developer: Freddie Mac; Fannie Mae
Sector: Banking/financial services
Purpose: Assess mortgage applications
Technology: Underwriting algorithms
Issue: Bias/discrimination - race, ethnicity
Transparency: Governance; Black box
Investigations, assessments, audits
News, commentary, analysis
Published: August 2021