Rajesh Bhat of Roostify: When Will the Mortgage Industry be Truly Automated?

Despite significant inroads, the mortgage origination process remains overly complex, dominated by a considerable volume of paperwork that causes inefficiencies and cost increases across the industry. The mortgage industry has been moving towards automation, but still has a long and complex road ahead. Rajesh Bhat, Co-Founder and CEO of Roostify, offers his perspective on what steps lenders can take today to better prepare themselves for the journey, and the destination.

MBA NEWSLINK: Where do you see the largest gaps in the mortgage origination process that are getting in the way of full automation? 

Rajesh Bhat

RAJESH BHAT: The largest gaps in the mortgage origination process have been with technology adoption – getting the whole process off of paper and have it be fully automated and digitized. The right technology makes the process more efficient, transparent, and comprehensive for both the consumer and the lender. Especially for processing, it smoothes out and simplifies the back-end and compliance aspect of the process, and reduces, if not outright removes, any human error.

To be clear, there will never be a 100 percent automated solution: we want people to still be part of the mortgage process, and we believe that technology will allow loan teams to spend less time in systems and more time with customers, helping them buy homes. I believe that having people involved in the home lending process is – and it will always be – essential, as this process starts with people: people who want to purchase a home for themselves. 

MBA NEWSLINK: What obstacles and opportunities will AI face in the mortgage industry moving forward? 

BHAT: Unlike many other industries, the mortgage industry has fallen behind on adopting AI and moving towards a digitized process. The pandemic really forced the industry as a whole towards digital automation. However, with automating the mortgage origination process, people often hold the perception that we are just moving the old and inefficient mortgage process online. At Roostify, our focus from day one was on transforming the home lending process and the experience. We want to incorporate AI and technology into the industry to re-shape the entire process moving forward, not just read and process what still gets filled out on paper. Digitization, then, becomes an opportunity for lenders to rethink and reinvent the process instead of just replicating the original process online.

Part of this transformation is to create a clear, succinct process for consumers so that they can better understand the whole mortgage process: the transaction, key risks, obligations and payment structures. There are many facets to the mortgage process so this will take some time, but with AI we’re looking to take unnecessary tasks, cost and time out of the equation, so that lenders can get their customers past the paperwork and into homes quickly and in the most cost efficient way possible.

MBA NEWSLINK: Where do you see the mortgage industry going in the next decade? How do you see the role of loan teams evolving as they are enabled with more sophisticated technology? 

BHAT: In the next decade we definitely want to see the mortgage industry integrate and adapt to new technologies: AI, machine learning, and other technologies that give us good data and information and can be reusable throughout the lending process and the life of the customer. Currently, lenders still rely heavily on human-driven processes, which not only take time but can also add to the risk of human error. Someone has to take the time to gather all the paperwork, make the calculations, find the source of truth in data and compliance. A lot of these processes can easily be transferred over to machine learning and AI to be handled in a very safe and secure way, while adding efficiency. 

For example, digitizing data from documents replaces the need for manual data entry, a repetitive process that creates operational inefficiencies, opportunity for errors and is time consuming and costly. The integration of valid data at the beginning of the process allows the mortgage experts at the table to really apply their skills, knowledge, and expertise in getting a loan closed as opposed to double and triple checking information. As mentioned earlier, we don’t want to take people out of the process: we want to better equip them, provide them with the resources for efficiency, and have them contribute to the home lending process in a more meaningful way.

MBA NEWSLINK: What recommendations do you have for lenders who want the cost- and time- efficiencies of an AI or ML-driven process, but are worried about “dehumanizing” the process? 

BHAT: I think “dehumanizing” comes from using buzzwords like “digitization” and “automation” without fully understanding their power and benefits. However, as I mentioned earlier, we don’t want to take people out of the process. On the contrary, I believe the human-to-human experience really comes from providing connectivity and transparency in a very understandable and meaningful way – something that AI or ML cannot provide. Our customers want to build relationships with their borrowers that keep them coming back and building a human connection is critical to making that happen.

Technology and data give room for mortgage lending experts to spend more time with customers  and guide homeowners on the options that are available to them. Once the consumer has completed the digital process, it’s important that lenders provide human connectivity by reaching out to the consumers and supporting them through the journey until the consumer has been approved. While we want to make the process more cost and time efficient, at the end of the day, you’re purchasing the home for people to live in, so you cannot take people out of that process. It’s important that mortgage lenders are readily available and exercise their analytical skills and expertise, to provide that extra level of support and comfort for the consumer. 

MBA NEWSLINK: How will more AI and ML in the mortgage origination process further benefit consumers? 

BHAT: More AI or machine learning in the mortgage process will further benefit the consumer by simplifying the process for them and giving consumers more exposure and clarity to understand what they’re doing and what the process entails. Ultimately, we are seeking to recognize patterns among the unique originations on our platform and to recommend actions based on those patterns to streamline the lending journey. These patterns will not necessarily relate to a credit decision, but rather to an overall process. 

We view the process of digital automation of the mortgage process as ‘levelling the playing field.’ Many people might be intimidated or may not even think to apply for a mortgage if they have to go to a bank or mortgage broker and navigate a complex and often tedious system of paperwork. By automating the process, we can take out the worry and fear people have over losing out on the process and in turn, they can receive better, tailored advice and counsel of the whole lending process, and ultimately this is our goal with automating the process.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)