This bill aims to regulate the use of artificial intelligence (A.I.) in mortgage lending decision tools to reduce discrimination in lending practices. It establishes that no A.I. mortgage loan tool can be sold, developed, used, or offered in New Jersey unless it has undergone a bias audit within the past year. The bill mandates that the sale of such tools includes an annual bias audit service at no extra cost, which provides audit results and a plan for implementing recommendations. Additionally, developers must implement the recommendations from the most recent bias audit before offering the tool. The bill also requires lenders to disclose the use of A.I. tools to mortgage applicants and restricts the input of personal categories into the A.I. evaluation process, allowing only quantifiable metrics.

Violations of these provisions can result in civil penalties, with first-time offenders facing fines of up to $1,500, which increase by two percent for each day the violation continues. Lenders and mortgage originators who fail to notify applicants about the use of A.I. tools or who input personal categories into the tools may incur fines of up to $500. The bill also outlines the role of an independent auditor in conducting bias audits and emphasizes the need for transparency and accountability in the use of A.I. in mortgage lending. The act is set to take effect 90 days after enactment, allowing for necessary administrative preparations.