HUD issues Fair Housing Act guidance on AI use

The U.S. Department of Housing and Urban Development (HUD) on Thursday announced new guidelines that aim to apply the provisions of the Fair Housing Act to the use of generative artificial intelligence (AI) in the realm of housing.

HUD released separate pieces of guidance aimed at applying Fair Housing Act provisions to two key areas of concern in which AI use could impact the fair application of housing services: the tenant screening process and “its application to the advertising of housing opportunities through online platforms that use targeted ads,” HUD said in its announcement.

“Today’s announcement is in accordance with President Joe Biden’s Executive Order, which called on HUD to provide guidance to combat discrimination enabled by automated or algorithmic tools used to make decisions about access to housing and in other real estate-related transactions,” the announcement explained.

The Federal Housing Finance Agency (FHFA) also recently appointed an AI “czar” to oversee the agency’s policy approach to the technology.

The meteoric rise of generative AI technology has created several concerns in the housing and mortgage industries. Due to the way that such tools gather and compile information, certain consumers and organizations have expressed concerns that AI tools may not have sensitivity to equal protection in housing despite the growing use of such tools in the market.

“The Fair Housing Act prohibits discrimination on the basis of race, color, national origin, religion, sex (including gender and sexual orientation), disability, and familial status,” Demetria McCain, HUD’s principal deputy assistant secretary of fair housing and equal opportunity, said in a statement.

“Housing providers, tenant screening companies, advertisers, and online platforms should be aware that the Fair Housing Act applies to tenant screening and the advertising of housing, including when artificial intelligence and algorithms are used to perform these functions.”

Regarding tenant screening, many of these functions are undertaken by third parties that may elect to use AI technology to aid with specific screening decisions, HUD explained.

“The [new] guidance also suggests best practices for fair, transparent, and non-discriminatory tenant screening policies, for both housing providers and companies that offer tenant screening services,” the announcement stated. “The Fair Housing Act prohibits both intentional housing discrimination and housing practices that have an unjustified discriminatory effect.”

The tenant screening guidance makes clear that “use of third-party screening companies, including those that use artificial intelligence or other advanced technologies, must comply with the Fair Housing Act, and ensure that all housing applicants are given an equal opportunity to be evaluated on their own merit.”

With advertising, HUD is aiming to make companies that use AI aware of the need for caution when creating material that is designed to reach people under protected classes or other attributes covered by the law.

“Violations of the Act may also occur when ad targeting and delivery functions are used, on the basis of protected characteristics, to target vulnerable consumers for predatory products or services, display content that could discourage or deter potential consumers, or charge different amounts for delivered advertisements,” the announcement stated.

At last month’s The Gathering by HousingWire, a panel of three real estate professionals discussed how they’re using artificial intelligence technology in their businesses. The most predominant uses in that discussion were focused on consumer outreach as well as streamlining the compliance process.