Hassan Rashid: When Adopting AI, Mortgage Lenders Must Consider Both the Benefits and the Risks

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PERSON OF THE WEEK: Artificial intelligence (AI) is poised to further revolutionize the mortgage lending process, which has already been undergoing a transformation with the advent of automation. With the integration of AI, mortgage lenders will not only be able to fully automate key pieces of the loan origination process, they will also be able to achieve transactions that are more natural and fluid, thus driving borrower satisfaction, while at the same time significantly reducing the risk of loan defects.

To learn more about what AI will bring to the mortgage process, MortgageOrb recently interviewed Hassan Rashid, chief revenue officer at front-end mortgage technology firm TAVANT.

Q: How is digital mortgage lending transforming the traditional mortgage application and approval process?

Rashid: Digital mortgage lending is fundamentally reshaping the traditional mortgage application and approval process. This transformation encompasses two primary aspects: enhancing the customer experience and driving automation in the mid-office and back-office operations.

The focus on improving the customer experience involves leveraging user-friendly platforms and streamlining processes to enable borrowers to complete applications online, electronically submit documentation and track their application progress in real-time. This not only enhances convenience and satisfaction but also expedites processing times.

Simultaneously, technologies, such as robotic process automation (RPA) and machine learning algorithms, are reducing reliance on manual labor and revolutionizing backend operations by automating repetitive tasks, data validation, risk assessments and compliance. By optimizing these processes, lenders can re-allocate resources more efficiently, with a particular emphasis on exception management and personalized customer interactions.

The digitization of the mortgage lending process is crucial in an environment characterized by market uncertainties and potential interest rate hikes. It enables lenders to establish resilient and efficient processes that minimize dependence on human intervention, which has historically driven up costs.

As digital mortgage lending becomes the focal point for lenders, they are actively reevaluating their business processes and technologies to design more streamlined operations that prioritize exception management rather than treating exceptions as the norm. This transformation is not a passing trend but rather a permanent shift in the industry. Lenders recognize the significant benefits of digitalization, including improved operational efficiency, cost savings and enhanced customer experiences. As the industry progresses, we can expect continued advancements in digital lending technologies, such as the integration of artificial intelligence, data analytics and blockchain, to further optimize and secure mortgage transactions.

Q: What impact is AI expected to have on the future of mortgage rates and lending terms, and how can borrowers leverage this technology to secure more favorable loan options?

Rashid: The integration of AI in mortgage technology is set to reshape lending practices, offering borrowers the opportunity to secure more favorable loan options. As the mortgage industry embraces digital transformation, the integration of AI technologies, such as generative AI and chatbots, holds great promise for improving the lending process.

AI’s ability to analyze vast amounts of data and derive insights can help lenders make more informed decisions regarding loan rates and terms. By leveraging AI algorithms, lenders can assess risk profiles with greater accuracy, leading to more personalized loan options for borrowers. This has the potential to result in more favorable terms and rates for borrowers who may have previously been subject to rigid, one-size-fits-all lending practices.

To leverage AI effectively, borrowers should proactively seek lenders who have embraced AI technologies in their lending processes. By partnering with AI-enabled lenders, borrowers can benefit from more accurate risk assessments, streamlined application processes and personalized loan options. Additionally, borrowers can stay informed about emerging AI trends in the mortgage industry and be prepared to take advantage of innovative offerings that leverage AI for better loan terms and rates.

Q: Are there any potential challenges or risks associated with the increasing reliance on AI in digital mortgage lending, and how can lenders address them to ensure a seamless borrower experience?

Rashid: As the mortgage industry increasingly relies on AI in digital mortgage lending, it is essential to carefully consider the potential challenges and risks associated with its adoption. One primary concern is ensuring responsible and ethical use of AI to avoid unintended consequences or disadvantages for borrowers.

Lenders must approach AI implementation with caution, considering where it makes sense to utilize AI and being mindful of potential biases or discriminatory outcomes. Transparent and explainable AI models can help address these risks, allowing lenders to provide clear insights into the factors influencing lending decisions and ensuring fairness throughout the process. Additionally, responsible and ethical implementation of AI is crucial to ensure compliance with regulatory frameworks and mitigate potential risks. Collaboration among industry stakeholders, regulators, and technology experts is essential to establish guidelines and best practices that govern the appropriate use of AI in mortgage lending.

Another challenge lies in striking the right balance between efficiency and human touch. While AI can significantly streamline the digital mortgage lending process, it is vital to maintain a seamless borrower experience that combines the benefits of automation with personalized interactions. Careful design and implementation of AI technologies can enable lenders to enhance efficiency without sacrificing the human element.

By leveraging AI to automate routine tasks and gather insights, lenders can allocate more time and resources to provide tailored guidance and support to borrowers. This human-AI collaboration can create a harmonious lending experience that leverages the strengths of both technology and human expertise.

While AI presents immense opportunities for digital mortgage lending, lenders must be mindful of these challenges and risks it entails. Striking the right balance between efficiency and human touch is crucial, as borrowers continue to value personalized interactions throughout the lending process. Through collaboration and careful consideration, the mortgage industry can unlock the full potential of AI to create a more efficient, transparent, and borrower-centric lending ecosystem.

Q: If you knew what you now know at the very beginning of the digital mortgage age, what would you have done differently? From a lender’s point of view? From a technologist’s point of view? 

Rashid: Reflecting on the early days of the digital mortgage age, there are clear areas where both as a lender and technologist I could have approached things differently to drive greater efficiency and embrace the potential of technology. From a lender’s perspective, a more thorough evaluation of processes and the strategic utilization of technology would have been largely beneficial. If armed with the knowledge we have now, as a lender I would have focused on leveraging technology to reduce reliance on manual labor and streamline automated processes. By clearly understanding which aspects of the mortgage process require a human touch and which can be handled by technology, lenders could have optimized their operations, reducing costs and improving overall efficiency.

From a technologist’s point of view, I would have made the investment in advanced technologies, including AI, earlier on. Embracing AI-driven solutions and leveraging its capabilities in automating tasks, data analysis and decision-making could have accelerated the digital mortgage landscape even further. The unexpected acceleration of AI’s progress emphasizes the importance of staying ahead of the curve and anticipating technology advancements. Investing in research and development to explore the potential applications of AI and proactively integrating it into the digital process would have positioned lenders at the forefront of innovation and could have provided a significant advantage. 

Moving forward, it is crucial for both lenders and technologists to learn from the past and adapt accordingly. Lenders should continue to prioritize the strategic use of technology, optimizing processes and reducing reliance on manual intervention. Embracing AI and other advanced technologies is no longer an option but a necessity to stay competitive in the market. Technologists must remain proactive, closely monitoring advancements in AI and other emerging technologies and driving their integration into the digital mortgage landscape. Collaboration between lenders and technologists is vital to ensure the seamless adoption and effective implementation of technology, driving efficiency, cost savings and improved borrower experiences.

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