The U.S. Government Accountability Office (GAO) has called on the Federal Housing Finance Agency (FHFA) to issue written guidance to government-sponsored enterprises Fannie Mae and Freddie Mac regarding fair lending compliance, citing growing risks stemming from artificial intelligence in the housing market.
In a report released Thursday, the government watchdog highlighted that while digital tools can benefit the housing market, they introduce substantial risks related to AI’s impact on discrimination and privacy concerns.
The GAO, Congress’ investigative arm, found that the FHFA’s recent shifts in oversight policies have resulted in a regulatory gap, necessitating clearer communication to ensure Fannie and Freddie effectively and legally utilize these emerging technologies.
The report details how property technology, known as proptech, has permeated nearly every phase of homebuying. From AI-driven automated valuation models to chatbots and algorithmic advertising, these tools are becoming increasingly central to how consumers find and finance homes.
Although the GAO acknowledged these technologies can lower costs and streamline underwriting, it cautioned they could inadvertently violate fair housing laws. A primary concern is the use of “black box” algorithms — complex models that make loan denials and valuation decisions hard to explain, potentially perpetuating and masking discriminatory outcomes.
Additionally, the report flagged advertising algorithms that might steer protected classes toward or away from specific listings, as well as online platforms that aggregate sensitive consumer data, raising privacy concerns.
The GAO’s critique centers on a lack of specific direction from the FHFA amid a period of regulatory transition. In 2025, the FHFA updated its fair lending oversight program to align with new priorities. This overhaul included rescinding previous guidance, waiving certain components of the fair lending rules and modifying its examination approach.
The watchdog found the FHFA failed to replace the rescinded instructions with updated guidance for Freddie Mac and Fannie Mae. As a result, the companies may be operating without a clear outline of their regulatory obligations regarding these emerging technologies.
The GAO recommended that the FHFA director provide written clarification to Fannie and Freddie explaining how they are expected to comply with the new oversight regime. Without such instructions, the GAO warned, the companies cannot ensure they are safeguarding consumers against the risks of AI.
