Will your loan officer soon be a robot? – April 1st, 2020

Issue Seventeen: AI in mortgage lending—Will your loan officer soon be a robot?


Say “A.I.” (artificial intelligence) during a casual conversation and chances are good that same conversation will also quickly include words like “Skynet” or “I, Robot.” It’s really easy to get carried away imagining what can be done with this kind of technology. And the general understanding of AI held by most people begins and ends with machines that can learn on their own.

While it’s unlikely we’ll be overrun with the human-hating, AI-enabled robots of the cinema anytime soon, we are seeing it take its place throughout numerous industries. And our own industry, the mortgage and real estate world, may be next.  According to the Fannie Mae Mortgage Lender Sentiment Survey, produced in October, 2018: three-fifths of mortgage lenders surveyed say they expect to adopt some AI solutions in next two years.

So will your next loan officer be a robot? Probably not.

What AI is increasingly being used for in our industry is operational efficiency. With the amount of data and paperwork required throughout our cumbersome, multi-provider process, AI solutions are an obvious solution to gathering, sorting, reading and even analyzing all of the data coming into the transaction.

AI could also dramatically improve the borrower experience. Douglas Merrill wrote a great article for Forbes Magazine about a year ago, in which he discusses the digital experience with AI:

“41% [of lenders surveyed in the Fannie Mae report] say they expect [AI] will improve the borrower experience. For instance, while right now you could expect to wait about three weeks for a mortgage application to be approved, AI will probably reduce that to one day within a few years. Bankers also envision smart online applications, where interview questions are responsive to your specific answers. These methods shorten the basics of the process to focus it more on your qualifications and needs.”“AI is Coming to Take Your Mortgage Woes Away.” (Forbes, 4/4/2019, Douglas Merrill) https://www.forbes.com/sites/douglasmerrill/2019/04/04/ai-is-coming-to-take-your-mortgage-woes-away/#22b195c77567

But wait, there’s more!

Merrill also theorizes that AI could provide a better, faster, more efficient way to evaluate the ability of people to repay the mortgage. Your “robot” may actually end up in underwriting:

“The bigger picture is that AI/ML can better evaluate the ability of people to repay their mortgage. This should open up loans to a wider variety of people who are good bets to repay a mortgage but for whatever reason – typically lack of credit history – would be rejected today. ML can literally take thousands of data variables and, through its advanced mathematics, find hidden correlations that better indicate whether someone will repay their loan. All that insight allows lenders to view borrowers as more than the handful of numbers in traditional lending models. Basically, AI/ML gives them a fuller picture of applicants as people.”


In a great BizTech article, Phil Goldstein agrees that mortgage AI could dramatically improve operational efficiency and the customer experience. But he adds fraud detection/prevention to the list as well.


“Applications intended to improve operational efficiency are most appealing to lenders, according to the [Fannie Mae] survey — specifically, technology that enables machines to process data from various sources to identify fraud or detect defects early in the underwriting process (known as anomaly detection automation).” “How will AI Affect the Mortgage Lending Process?” (BizTech, 11/30/2018 Phil Goldstein


Almost sounds too good to be true, no? Well, to a degree it is…for now. The biggest problem many lenders are having bringing in AI solutions is integrating these complex, state-of-the-art solutions with their existing technology structures. And it also appears that AI has not quite been developed to the point where it can detect fraud or do complex underwriting…yet.

So no, your loan officer will probably not be an android any time soon. But you’d better believe that quite a few lenders have AI on their minds right now. And they’re working to make it a reality sooner than later.

By the way, if you have some challenges you’d like to see us discuss in the context of “new” technology, send them our way! Just email me at jpaolino@lssoftwaresolutions.com.

Until Next Week,


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