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The Money Desk · Blog
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Questions to Ask Your Mortgage Lender About AI and Data Privacy

Use these questions to understand how a mortgage lender uses automated systems, handles your data, and explains an adverse credit decision.
From TheFinanceBase Team4 min to read
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Before you send financial documents to a mortgage lender, ask where automated systems are used, what information they rely on, who can access or receive your data, and how you can correct errors. Practices vary by lender, and not every automated tool is AI. If a lender denies your application based on a credit report, you can also ask for the reporting-company details and check the report for inaccuracies.

Where do you use AI or automated systems in my mortgage application?

Ask the lender to walk through each stage, not just underwriting. Automated tools may be used for document intake or data extraction, fraud screening, credit assessment, underwriting, property valuation, or servicing. Their use varies by lender; do not assume that a lender either uses AI everywhere or does not use it at all.

Ask which systems produce recommendations and which can determine or materially affect an outcome. Find out when an employee reviews an exception, a disputed result, or information that does not fit the system’s expectations. There is no general requirement established here that every lender disclose every AI tool or offer a particular human-review path, so ask for the lender’s actual process.

Regulation C uses a defined category called an automated underwriting system for certain mortgage-data reporting. That category is not a complete inventory of every AI, machine-learning, automated, or proprietary system a lender might use. The CFPB’s Regulation C materials explain the regulation’s scope and terminology.

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What information goes into these systems, and where does it come from?

Ask the lender to identify the information used at each stage and its source. That may include your application and supporting documents, credit-report information, property or valuation data, connected financial accounts, or information from third parties. Ask which categories can materially influence the application, how they are checked, and how to correct an error.

The CFPB has discussed the potential use of broad datasets in some algorithmic credit processes, including information harvested from consumer surveillance. That is a documented concern about possible data practices, not evidence that a particular mortgage lender uses surveillance-derived information. The CFPB’s guidance on complex-algorithm credit decisions and its 2023 release on AI-related credit denials provide context for asking how data informs a decision.

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Who receives or can use my information?

Ask whether information is shared with the lender’s affiliates, investors, vendors, or other parties, and what purpose each recipient serves. Ask what privacy choices apply and whether your choices differ by type of information or recipient. Request the lender’s privacy notice and read it alongside the answers you receive.

The CFPB’s mortgage compliance resources include privacy compliance topics, and its GLBA privacy-notice resources include information about Regulation P and model forms. Those materials describe a framework; they do not specify what an individual lender shares or what choices it offers.

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How long do you retain my documents and derived data?

Ask how long the lender keeps the documents you submit, extracted or inferred information, and copies held by vendors. Ask what happens if you withdraw your application or close the loan, whether any information must be retained for legal or operational reasons, who can access it, and what security controls apply to vendor access.

The CFPB’s general privacy resources do not establish one retention period for every lender or every type of mortgage data. Get the lender’s policy rather than relying on a presumed deadline.

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What specific reasons would I receive if you deny my application?

If a creditor takes adverse action, it must give the specific principal reasons for that action under the Equal Credit Opportunity Act and Regulation B—even when the decision involved AI or machine learning. A complex or opaque model is not an exception. A list of credit-score factors alone does not necessarily substitute for the specific reasons required for the adverse action.

Ask how the lender will explain the reasons that actually applied to your application. The CFPB states that creditors must be able to explain denial reasons specifically; in a September 19, 2023 release, CFPB Director Rohit Chopra said, “Creditors must be able to specifically explain their reasons for denial. There is no special exemption for artificial intelligence.” See the CFPB’s Circular 2022-03 and 2023 guidance announcement.

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How can I see and correct information from a credit-reporting company?

If a credit report contributed to a denial, ask which reporting company supplied it, which score the lender used, and how to obtain the report. CFPB consumer guidance says the adverse-action notice should provide relevant information about the reporting company and credit score. It also explains that you can request a free report from the reporting company within 60 days of the adverse-action notice and dispute inaccurate information.

Use the reporting company’s dispute process to challenge errors in the report. You can also ask the lender whether it offers a separate reconsideration or human-review process; that process varies, and the general CFPB guidance does not establish a universal procedure. See the CFPB’s steps for a credit application denied because of a credit report.

What should I compare when choosing between lenders?

If you are considering more than one lender, use the same questions with each and compare the answers in writing. A clear comparison can help you see differences in process without assuming that one lender is better based on a label such as “AI-powered.”

  • Use by stage: Which steps use automated systems, and do they recommend or determine outcomes?
  • Data: What sources and categories are used, for what purposes, and how can errors be corrected?
  • Sharing: Which affiliates, investors, or vendors receive information, and what privacy choices are available?
  • Retention and access: How long are documents and derived data kept, who can access them, and how are vendor access and security managed?
  • Review and correction: What routes exist to correct information, raise a disputed result, or request reconsideration?
  • Denial explanations: Will an adverse-action notice identify the specific principal reasons that applied?

The answers describe lender practices, not a ranking. The CFPB materials cited here establish consumer-protection and regulatory context; they do not compare individual lenders.

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