Colorado’s AI proposal raises new compliance questions for lenders

Colorado lawmakers recently released proposed rules that would establish new requirements for businesses that use automated decision-making technology in consequential decisions, including financial services and mortgage lending. Senate Bill 26-189 establishes requirements for developers and deployers of automated decision-making technology (ADMT) when the technology “materially influences” decisions affecting consumers. The law applies to consequential decisions made on or after Jan. 1, 2027. The legislation could have a broad impact on mortgage lenders, although more clarification is needed, according to industry experts. The bill defines ADMT as technology that processes personal data to generate information used to make, guide or assist in “consequential” decisions about an individual. Consequential decisions include those involving housing and lending, as well as employment, insurance, healthcare, education and essential government services. But Mitch Kider, chairman and managing partner of Weiner Brodsky Kider PC, is concerned that the definitions outlined in the proposed rules are not clear enough. “If [their] standard is going to be that the burden is on the user to show th...