Lending Algorithm Bias Could Get Harder to Prove Under HUD Plan

Mortgage lenders that use algorithms in their credit decisions are likely to gain greater protection from fair lending lawsuits under a federal housing agency proposal.

Lenders view the plan, likely to be released later this month, as the Department of Housing and Urban Development’s long-overdue recognition of their increased use of machine learning, artificial intelligence and other technology. Consumer advocates view it as an industry-friendly litigation clampdown.

“It seems like they’re trying to recommend that no one accused of housing discrimination would ever really be liable if they’re using an algorithm,” Andrew Selbst, a legal scholar with the New York-based ...