How Will Artificial Intelligence Affect the Mortgage Industry?

Artificial Intelligence (AI) has been employed as a means to streamline a variety of industries, and the mortgage space is no different. While AI can help create some efficiencies and cost-savings in the mortgage process, there remains the potential for much more in the future.


How AI Is Transforming the Mortgage Industry

The human element is always going to be an important part of the mortgage process, but a common complaint relates to issues with the customer experience. AI-powered technology is enabling mortgage lenders to create more personalized experiences and more meaningful engagements with borrowers.

For example, AI can tell a lender that, if people in a certain demographic contact them and are prequalified, they are highly likely to move forward with financing within the next 90 days. In other words, AI can identify behavioral patterns and trends that allow the lender to better serve potential clients.

AI can help lenders make smarter and faster decisions. This is a plus for borrowers who often complain about a drawn-out process. A speedier closing also allows lenders to produce more quality loans in less time.

These capabilities benefit both the mortgage borrower and the lender. The sheer volume of data available will also allow lenders to better assess risk and make decisions that will be the most profitable and least risky.

What Mortgage Companies are Using AI?

While AI is available on some level, not many mortgage lenders are using it. According to Fannie Mae’s recent Mortgage Lender Sentiment Survey, 63 percent of lenders admit being familiar with AI, but just 27 percent say they’ve used the tools in their business.

However, some lenders are making good use of these tools.

  • Freddie Mac, the government-sponsored mortgage giant, has partnered with ZestFinance to use AI and machine learning to pinpoint trends in an applicant’s record that traditional models might miss.
  • PointPredictive has created an AI tool allowing mortgage lenders to spot income discrepancies in loan applications and cut down on fraud.
  • Ellie Mae, a major loan origination system provider, has just announced the purchase of Capsilon. This acquisition will allow the lender to combine its current online lending platform with Capsilon’s AI solutions, which offer data-driven automation of part of the loan origination process.
  • Snapdocs, a mortgage closing platform, has just raised an addition $25 million in funding to expand its AI capabilities, which are focused on digitizing paperwork and automating many of the manual tasks included in the closing process.

The Future of AI in the Mortgage Space

AI has the potential to look beyond credit scores to assess the creditworthiness of borrowers. Perhaps not yet, but we may see this technology deployed to scan the web for any and all information about a potential borrower, including their LinkedIn and social media profiles.

AI is a time-intensive technology, and Fannie Mae’s survey reveals that nearly half of mortgage lenders are either trail users of the technology or are investigating its use. In the coming years, these numbers are sure to increase exponentially.