An AI model for mortgage servicing determines which delinquent borrowers receive proactive outreach. The model has a 15% higher probability of recommending outreach for White borrowers than Black borrowers with identical financial profiles. Under which framework is this MOST likely a violation?
Select an answer to reveal the explanation.
Short Explanation and Infographic
Here's the deal — b is correct because ECOA and CFPB guidance prohibit discrimination in all aspects of credit transactions, including the provision of credit-related services such as loss mitigation outreach. A model that systematically denies proactive assistance to Black borrowers with equivalent profiles as White borrowers receiving outreach constitutes racial discrimination in credit servicing.
Full explanation below image
Full Explanation
B is correct because ECOA and CFPB guidance prohibit discrimination in all aspects of credit transactions, including the provision of credit-related services such as loss mitigation outreach. A model that systematically denies proactive assistance to Black borrowers with equivalent profiles as White borrowers receiving outreach constitutes racial discrimination in credit servicing. NIST AI RMF (A) is a risk management framework, not a legal violation. GDPR (C) is a European regulation and Article 22 pertains to EU residents. SEC Regulation FD (D) applies to material nonpublic information to investors, not consumer financial services.