The Real Reason the Mortgage Industry Needs AI


BLOG VIEW: As a society, we are quick to fall in love with the latest buzzwords. Once we find one, we tend to use it early and often to describe everything our companies are doing, often without a strong concept of practical application.

There’s a bucket of buzzwords being tossed around today in the mortgage technology space. There’s hardly a press releases that doesn’t include the terms “AI,” “machine learning” or “robotic process automation.” No one wants to be left out of the race to the tools that will get the mortgage industry to the next level.

But what does AI really mean in the mortgage business? Is it just some fancy branding to be applied to yesterday’s automation? Actually, it’s not. It’s critically important and here’s why.

Why the Mortgage Industry Needs AI

First, AI does not mean we’ll be turning the day-to-day operations of our mortgage lending operations over to some assembly line robot that can out-think us. There is no sentient computer-based cyber-organism that is ready to do our work.

With AI-powered mortgage technology, we have the ability to make decisions using human-designed algorithms at speeds that are exponentially faster than what humans are achieve. We can write algorithms that can be modified by our own software to take into account new cases. We can write code that learns.

What does this give us? With AI, we have a real opportunity to provide real time intelligent, cognitive answers to users at the exact moment they need them to complete their work. 

At the same time systems are providing this information, redundant activity in other processes can be removed. All of those mortgage processors staring at screens to determine if the borrower sent in the right documentation, all of that goes away. Millions of those decisions will be made by the system in seconds.

Unlike people, AI can efficiently multitask because it can achieve perfect focus for the millisecond it takes to perform the task at hand. Meanwhile, the lender achieves exponential lift and immediate ROI.

This goes well beyond the automation of yesterday or even today. The focus is no longer about workflow, those assembly line functions are already built into our software.

What AI gives us is the ability to answer very complex questions very rapidly with a high degree of confidence. An increasingly complex mortgage lending environment makes this a requirement. Lenders that don’t have this within the next 24 months will be very likely to exit the business. 

The Benefits of AI in Mortgage

Marketing folk often provide a laundry list of benefits that come out of AI-enabled mortgage automation platforms. The truth is, it’s all about the quality of application. Poorly designed and implemented AI delivers no benefits to the modern mortgage lender.

On the other hand, the systems being developed today make it possible for mortgage lenders to underwrite, process and close mortgage transactions in a very short period of time. Right now, 10-day purchase money closes are commonplace, but tools are being developed that will enable lenders to close the loan in hours… possibly minutes.

Imagine walking up to an ATM or banking kiosk, applying for a mortgage and, within minutes, have the funds deposited into your account. We’re not that far off, except that the ATM is now the smartphone.

This concept has been floated many times in the past. It was a claim some mortgage technology vendors made back in the days of loan manufacturing automation.

The truth is, a lender can’t get the conveyor belt moving that quickly without AI. Not if it wants to originate fully compliant mortgages.

But with the right AI, the results can be nothing short of amazing.

Jim Rosen is vice president of product management at Mortgage Cadence.

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