Tavant’s Sandeep Shivam: AI’s Breakthrough Moment–Transforming the Mortgage Industry from Application to Closing
Sandeep Shivam, AMP, is Product Evangelist and Associate Director with Tavant, Dallas.
Many would argue this past year marked the peak of the artificial intelligence (AI) hype cycle. AI was a frequent discussion topic at industry events, while cost-cutting and automation dominated the news. In 2025, the mortgage industry will shift from planning to full AI implementation. A recent study from Fannie Mae showed that 30% of lenders have adopted or tested AI software. This number could grow to 55% in 2025.
Adopting AI-enabled technology solutions enhances the mortgage process across all channels by streamlining workflows, accelerating decision-making, reducing costs, minimizing repurchasing risks and automating loan production to expedite origination. Advancements in AI are transforming the mortgage industry, simplifying operations and refining risk evaluation, while also providing more personalized, enhanced borrower interactions. Lenders that are not leveraging AI will find it difficult to thrive. AI will be a key factor in differentiating lenders within the competitive 2025 mortgage market.
Automated Underwriting Generates Efficiencies
One of the most promising uses of AI in the mortgage industry is streamlining the underwriting process. By automating data checks, form population and repetitive tasks, AI lowers loan origination costs, reduces human errors and frees up resources for more complex decision-making. Machine learning algorithms analyze an applicant’s financial data, credit history, alternative data sources and predictive analytics to make faster, more accurate initial lending decisions. Integrating advanced technology that compares multiple automated underwriting system (AUS) responses, investor guidelines and loan data enables lenders to make faster, more informed credit evaluations. Additionally, AI models must comply with industry regulations, rely on high-quality data sources and undergo rigorous monitoring to prevent bias in lending decisions.
Borrower Enablement and Improved Customer Service
AI is empowering borrowers. It gives them the knowledge, data and tools to make informed financial decisions. Augmenting customer service channels with AI-enabled platforms allows lending organizations to provide immediate assistance, addressing questions about loan applications, statuses and other mortgage-related inquiries. These tools operate 24/7, alleviating customer service congestion and offering faster insights than human agents. Advances in natural language processing enable more conversational and effective interactions to resolve borrower issues. These tools equip borrowers, guiding aspiring homeowners through the application process.
Personalized Loan Recommendations and Offerings
AI is reshaping the lending experience by offering personalized loan recommendations tailored to borrowers’ unique financial situations. Machine learning algorithms analyze spending habits, credit histories and market trends to generate customized mortgage options. This client-centric approach ensures borrowers receive recommendations that align with their long-term goals, fostering trust and satisfaction.
By capturing and analyzing relationship data, AI enables lenders to provide more relevant loan products and services. Predictive analytics identify potential borrowers likely to convert, optimizing lead generation and accelerating sales timelines. Additionally, AI shortens the time to market for new products by predicting market performance and developing solutions at unprecedented speeds.
Fraud Protection and Regulatory Compliance
In 2025, there is an opportunity for AI to address one of the most pressing challenges in the mortgage industry: fraud detection and prevention. Advanced algorithms analyze application data for patterns and anomalies, flagging fraudulent activity for further review. These capabilities allow lenders to mitigate risks and adhere to stringent regulatory requirements.
Machine learning models can identify discrepancies in loan applications, such as falsified documents or unauthorized alterations, with greater accuracy than traditional methods. Proactively detecting fraud, AI protects lenders from financial losses and ensures compliance with anti-fraud regulations. These systems also operate continuously, providing around-the-clock security against evolving threats in a digital environment.
Improved Credit Scoring and Risk Assessment
Traditional credit scoring models often exclude borrowers who may otherwise qualify. Leveraging advanced algorithms to analyze vast amounts of data, AI can address this gap by incorporating spending patterns, payment histories, and alternative data sources to create a more comprehensive financial profile. Predictive analytics enhance lenders’ ability to assess creditworthiness, offering more accurate evaluations of borrower risk. These insights enable lenders to extend credit to a broader range of applicants while reducing the likelihood of defaults. As more sophisticated risk assessment models emerge, the industry is poised to adopt increasingly inclusive and efficient lending practices.
Conclusion
As the mortgage industry enters a new era of technological innovation, the integration of AI will redefine operations, customer interactions and decision-making processes. By automating labor-intensive tasks, enhancing risk assessments, and delivering personalized borrower experiences, AI enables lenders to operate more efficiently, while meeting the evolving needs of consumers. The advancements on the horizon for 2025 highlight the potential for AI to not only streamline the lending process but also make it more inclusive and secure. As lenders continue to adopt and refine these technologies, the mortgage industry is set to become a model for how AI can transform traditional sectors, creating lasting value for businesses and borrowers alike.
(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)
