President Biden’s Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence and It’s Impacts on Residential Leasing
By: Brian Duncan
President Biden’s Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence and It’s Impacts on Residential Leasing
By: Brian Duncan
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President Biden’s Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence and It’s Impacts on Residential Leasing

By: Brian Duncan – North Carolina Licensed Associate Attorney with Brownlee Whitlow & Praet, PLLC

     

        On October 30, 2023, President Biden issued Executive Order 14110 aimed at setting standards for safety, security, and privacy related to the development and use of artificial intelligence (“AI”). The executive order seeks to increase regulation
of AI across many industries nationwide, and its impacts will be far reaching. The residential leasing industry will be one of
the industries that feels these impacts as property management professionals continue to implement AI software that can
help make their processes more streamlined and efficient. While the executive order is not a direct policy change, it directs federal agencies, such as the Department of Housing and Urban Development, the Federal Housing Finance Agency, and the
Consumer Financial Protection Bureau, to “provide clear guidance to landlords, Federal benefits programs and federal contractors to keep AI algorithms from being used to exacerbate discrimination.”

        Discrimination and bias that can unintentionally be made worse by AI are two of the main issues that the Biden Administration is seeking to address with this executive order. Section 2 highlights the policies and principles behind the executive order. Section 2 states, “from hiring to housing to healthcare, we have seen what happens when AI use deepens discrimination and bias, rather than improving quality of life.” Essentially, the issue stems from creators of AI software
imparting pieces of their unconscious bias into the AI Software they are creating. This can lead to AI algorithms that are
used for various types of screening tools, including resident screening tools used in the residential leasing industry,
to yield discriminatory results that are reflected in the residents they approve or deny. Section 7.3 of the executive order
directs the Secretary of Housing and Urban Development to issue additional guidance within 180 days of the issuance of the executive order. The executive order directs that the additional guidance shall address the use of resident screening systems
in ways that may violate the Fair Housing Act, the Fair Credit Reporting Act, or other relevant Federal Laws. Under
Section 7.3, the Consumer Financial Protection Bureau is also encouraged to issue additional guidance regarding the appropriate use of AI tools to ensure compliance with Federal Law. The goal for this guidance will be the implementation
of Federal Regulations that mitigate the unintended damages caused by the creation and use of AI software and algorithms which may contain the biases of their human creators.

        The federal guidance from the Department of Housing and Urban Development, and possibly from the Consumer Financial Protection Bureau, will likely be issued within the next few months. Until then, there are no new federal regulations
or changes that are currently in effect as a result of this executive order.

        For more information about Executive Order 14110 and its impacts on the residential leasing industry, a link to the executive order and a link to the White House Fact Sheet containing a summary of the executive order are posted below:

Executive Order 14110:
https://www.govinfo.gov/content/pkg/FR-2023-11-01/pdf/2023-24283.pdf

White House Fact Sheet:
https://www.whitehouse.gov/briefing-room/statements-releases/2023/10/30/fact-sheet-president-biden-issues-executive-order-on-safe-secure-and-trustworthy-artificial-intelligence/ 


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