PrivoCorp CEO Sam Verma: The Future of the Mortgage Industry: Augmenting Human Capabilities with AI and Automation

Sam Verma, CEO at PrivoCorp, is a mortgage industry veteran of 25-plus years of experience. She has institutional-level loan servicing experience and spent two decades originating mortgages and/or managing origination teams and is a go-to consultant advising mortgage processors on working smarter to drive down costs and close loans faster. She can be reached at sam@privocorp.com.

The mortgage lending industry is experiencing a significant revolution, powered predominantly by artificial intelligence (AI) and Blockchain technology.  While AI holds tremendous promise for transforming the lending process, there are valid concerns about its influence on human employment and the likelihood of biased outcomes.

Significance of blockchain technology

Blockchain technology has played a pivotal role in significantly reducing operational turnaround times in the mortgage process. This article examines how AI and humans can coexist in the mortgage lending industry, taking advantage of adopting to this technology.

AI and blockchain have matured tremendously in recent years and are ready to transform mortgage lending. AI can analyse alternative data to augment underwriting and create dynamic risk models. Blockchain can securely store loan documents and data and enable frictionless mortgage transfers.

Before proceeding, it’s important to highlight that AI cannot replace the crucial human connections and relationships between advisors and customers.

How Artificial Intelligence is making a difference in Mortgage Lending

The contemporary mortgage lending industry is experiencing the harmonious cohabitation of AI and human involvement, leading to numerous advancements and improvements. Here are some of the ways AI is enhancing the mortgage lending experience:

Enhanced customer experience: AI is transforming the customer experience by offering real-time and personalized interactions. By comprehending and predicting customer needs and preferences, AI empowers mortgage advisors to tailor their services better and elevate overall customer experience and satisfaction.

Automation of routine tasks: AI’s capacity to automate repetitive processes and tasks such as data entry and document processing allows mortgage professionals to focus on strategic and value-driven activities. This boosts efficiency, eventually leading to enhanced client interactions and streamlined processes.

Predictive analytics: Leveraging insights from diverse data sources, AI equips mortgage professionals with predictive analytics, allowing them to make more informed decisions. These data-driven forecasts encompass market trends and customer behaviour, enabling proactive responses to changing market dynamics.

Enhanced risk assessment: Leveraging powerful algorithms, AI facilitates accurate risk assessments and underwriting decisions. By analyzing vast amounts of data, mortgage companies can minimize the risk of loan defaults, fostering a more robust and efficient mortgage lending ecosystem.

Process optimization: Using AI to analyze historical transaction data identifies opportunities for process enhancement within the mortgage lending ecosystem. Implementing these optimizations improves efficiency, lowers costs, and streamlines operations for mortgage lenders.

Fraud detection: Machine learning algorithms built into the AI framework can safeguard against fraudulent activities in mortgage applications. Detecting potential fraud ensures the security and integrity of the mortgage lending process, protecting both customers and mortgage advisors.

Document management: AI streamlines the document management process, making it easier for mortgage professionals to save, retrieve, and manage customer information and loan documents. This seamless automation reduces the possibility of errors and speeds up the mortgage loan procedure.

AI Underwriting Raises Concerns

Algorithmic underwriting is one distinct and contentious way AI could impact the mortgage lending industry. Automated algorithmic underwriting evaluates loan applications and determines borrowers’ creditworthiness using AI and ML algorithms. As it depends on data analysis rather than human judgment, this process is debated to be faster and more unbiased than traditional underwriting approaches.

Despite concerns around it, several mortgage companies are already adopted algorithmic underwriting, and it may gain wider acceptance in the future. As with any new technology, mortgage experts and the industry must carefully consider the potential benefits and threats of algorithmic underwriting and ensure that it is utilized responsibly and ethically.

Humans will continue to be involved in the lending process.

While AI can certainly impact mortgage lending, it cannot entirely replace humans when it comes to cultivating relationships. AI can free up human professionals’ time to focus on relationship-building and providing borrowers with tailored advice.

Nonetheless, the human touch, based on rapport, trust, and empathy, is still a key aspect of the mortgage industry that AI may never fully replace. In this context, personal interactions and relationships will continue to be highly valued.

By embracing the collaboration between AI and human expertise and learning to coexist, mortgage advisors and companies can elevate their services to new heights. The combination will enable them to provide more tailored, responsive, and relationship-based solutions, ensuring effectiveness in the modern mortgage lending industry while maintaining a competitive edge.

Transforming Mortgage Operations with AI and Blockchain

To fully leverage these technologies, mortgage lenders need to reimagine their operations around hybrid human-machine collaboration. People will focus on relationship-driven advising and oversight, with AI and blockchain augmenting tasks such as:

Document collection/verification

Risk modelling/underwriting

Loan servicing and monitoring

Securitization processes

Lenders need access to comprehensive historical data and must integrate AI and blockchain into their tech architecture. APIs will connect core systems to distributed ledger networks with smart contract functionality. Cloud-based AI models can interface with blockchain data and traditional databases.

Mortgage industry has made immense strides in the acceptance of technology. This will help gain competitive advantage by reducing costs and risks.

Is the Industry Ready to be Without Human Intervention?

While AI and blockchain technology will transform many aspects of mortgages, the industry is not yet ready to go fully without human involvement. Advising homebuyers, assessing nuanced risks, and providing oversight still require human judgment, empathy, and discretion.

Rapidly transitioning to full automation could undermine quality and trust. Instead, the prudent path is to gradually integrate emerging technologies in a way that augments human capabilities rather than replacing them. Mortgage lending still relies on relationships and expertise; technology expands how people can apply those strengths. With responsible implementation, AI and blockchain will enhance rather than eliminate the essential human role in mortgages.