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- Don't blame AI. HUD releases guidelines on the use of AI as it applies to the Fair Housing Act
Don't blame AI. HUD releases guidelines on the use of AI as it applies to the Fair Housing Act
Plus: The Fed is looking for a job market cool-down. It just got one
Good morning! This is Mortgage Nuggets, your daily dive into the pool of mortgage news. Here’s what we’ve got for you today…
Disclaimer: Average mortgage rates as of May 03, 2024. © MND's Daily Rate Index.
1. The Fed is looking for a job market cool-down. It just got one
In April, U.S. employers scaled back hiring, and the unemployment rate rose, suggesting a possible cooling of the labor market after a strong start to the year.
Nonfarm payrolls, a measure of employment, advanced just 175,000 last month, marking the smallest gain in six months. Average hourly earnings climbed 3.9% YoY, the slowest pace since June 2021.
A cooler job market reduces inflation pressures, which may prompt the Federal Reserve to lower interest rates, potentially stabilizing or lowering mortgage rates.
“The more jobs reports you get like this,” then “the more confident we can be that the economy is not overheating,” Austan Goolsbee, the president of the Federal Reserve Bank of Chicago, said in a Bloomberg Television interview.
2. Realtor.com reports active inventory up 33.3% YoY; New listings up 10.4% YoY
• Active inventory increased, with for-sale homes 33.3% above year-ago levels.
For the 25th straight week, there were more homes listed for sale versus the prior year, giving homebuyers more options. As mortgage rates have climbed to new 2024 highs, we could see sellers adjust their plans, since nearly three-quarters of potential sellers also plan to buy a home.
• New listings–a measure of sellers putting homes up for sale–were up this week, by 10.4% from one year ago.
Since February, the number of homes newly listed for sale has surpassed year ago pace by double-digit with the exception of a few weeks around this year’s spring holidays. As reported in the Realtor.com April housing report, newly listed homes trailed behind every prior year except for the pandemic-induced starting point of 2020 and the record low of 2023.
3. Charted: Effective mortgage rate among outstanding mortgages by state
Effective mortgage rates among homeowners are significantly below the current average 30-year fixed mortgage rate, which stood at 7.28% as of May 3, 2024.
Source: Federal Housing Finance Agency (FHFA)
4. More Nuggets
✍️ NAR clarifies when a buyer contract will be required under settlement. (PFR)
📈 Rocket delivers $291M profit amid improved margins and MSR acquisitions. (FT)
📝 Freddie Mac expands use of AOLs in selling guide update. (Freddie Mac)
5. HUD warns on AI-fueled housing discrimination
The Department of Housing and Urban Development (HUD) is addressing potential violations of the Fair Housing Act by artificial intelligence (AI), with new guidelines focusing on tenant selection and housing advertisement biases.
HUD's guidance emphasizes that discriminatory practices in tenant screening and targeted advertisements, whether directly or through AI, are violations of the Fair Housing Act.
“A housing provider or a tenant screening company can violate the Fair Housing Act by using a protected characteristic — or a proxy for a protected characteristic — as a screening criterion,” the document reads. “This is true even if the decision for how to screen applicants is made in whole or in part by an automated system, including a system using machine learning or another form of AI.”
You’re all caught up. See you on Wednesday!
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