#USA #New York #AI Governance #mortgage banking #Brody Gapp

Brody | Gapp Launches Mortgage AI Governance Audit Practice

In a significant move for the mortgage banking industry, Brody | Gapp LLP, a national law firm specializing in mortgage compliance and AI governance, has introduced its Mortgage AI Governance Audit Practice. The firm also revealed plans to publish The Mortgage Bankers AI Governance Guide™ in the third quarter of 2026. These initiatives were launched during the MBA Secondary Capital Markets Conference held in New York.

The Role of Friday Harbor

The Seattle-based AI pre-underwriting platform, Friday Harbor, stands out as the first mortgage technology provider to successfully complete the firm’s Limited Attestation. This engagement was voluntarily initiated by Friday Harbor, a proactive step taken before the advent of regulatory requirements. The attestation evaluates various aspects of the platform including fair lending practices, adverse actions under Regulation B §1002.9, model governance, vendor risk management, data governance, internal controls, and readiness for examination.

As the landscape of AI continues to evolve, especially with Freddie Mac's recently instituted AI risk management requirements and Fannie Mae's upcoming regulations taking effect on August 6, 2026, organizations face mounting pressure to ensure compliance. According to James W. Brody, Founding and Managing Partner of Brody | Gapp, "On one side, binding AI governance requirements are already in effect at Freddie Mac, while Fannie Mae's obligations will soon follow. However, very few lenders currently have the ability to produce defensible governance files, which is a concern."

Insights from The Mortgage Bankers AI Governance Guide™

The Mortgage Bankers AI Governance Guide™ is designed as a comprehensive resource and reference for practitioners. It outlines the various AI deployments that might be encountered within a fictional Independent Mortgage Bank. Furthermore, it delves into potential AI governance issues relevant throughout the mortgage lifecycle. The guide aims to furnish valuable insights on establishing defensible AI deployments for lending institutions, catering specifically to roles such as CEOs, General Counsels, Compliance Officers, and HR personnel.

As explained by Ronald Gapp, Jr., a Founding Partner, "The guide was created with the intent of addressing what compliance committees require when faced with demands such as examination requests, quality control self-reports, or production demands during legal discovery."

The Cutting-Edge Audit Practice

The Mortgage AI Governance Audit Practice is a groundbreaking endeavor developed in tandem with Marvin Chang, who serves as the firm’s Senior FinTech AI Advisor. Chang is also affiliated with Duke University’s Pratt School of Engineering, complementing his experience leading Caliber Home Loans’ digital transformation efforts. This collaboration aims to provide clients with high-quality insights and practical solutions tailored for today’s rapidly evolving mortgage landscape.

Brody | Gapp LLP is dedicated to supporting independent mortgage banks, credit unions, depositories, brokers, servicers, and fintechs with thorough compliance, litigation, and AI governance services. To find out more about the firm's offerings, interested parties can visit their website at brodygapp.com. With initiatives like the AI Governance Audit Practice and the forthcoming guide, Brody | Gapp positions itself at the forefront of compliance innovation in the mortgage banking sector.

In a world where technology continues to shape the industry, companies like Friday Harbor exemplify exemplary practices and foresight within the mortgage technology space. By embracing proactive measures for AI governance, they not only safeguard themselves against future compliance challenges but also set a benchmark for peers. This proactive stance highlights the ultimate goal: ensuring that all stakeholders meet the necessary standards while fostering trust in the broader financial ecosystem.