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August 10, 2023

The Mortgage Industry’s Low-Hanging AI Fruit

Despite all the technology lenders have deployed over the past three decades, mortgage's are still pretty behind.

If you’re developing technology, or using it in your business, you know you’re caught up in the current AI whirlwind. A substantial amount of the news is focused on the future potential of these new tools being rolled out.

While that’s exciting and a lot of fun to contemplate, what our customers want to know is what we can do now to make their lives better. If that’s the mortgage borrower, specifically, they want a satisfying experience.

Fortunately, the technology lenders have deployed today for mortgage loan origination is getting that job done. We’ve been watching borrower satisfaction scores increase over time.

But AI promises to help lenders do even better.

Not getting lost in the wind

If you’re a lender, you’re likely getting daily emails about this or that new AI tool. Most of them are not ready for prime time and getting caught up in them is a sure way to spend your technology investment to educate a fintech firm.

It’s easy to get carried away when talking about future tech and slide over into science fiction instead of mortgage technology fact.

Instead of visiting with people about AI, we often refocus the conversation on advanced computing capabilities and proven technology that we know can actually solve problems. That's really what our customers want to talk about.

This is not to say that AI isn’t in use right now. The idea of setting up a scalable computing farm in the cloud that can process an extremely large amount of data and then process it to make decisions is not science fiction. We’re doing it today and it holds great promise for the future.

It has opened up new computing techniques that we are using to identify patterns in the data that are not discernible at a human level, or in a small quantity. Those patterns hold clues to increase efficiency in the mortgage business, and that's where we need to be focusing.

With a cost to originate a loan exceeding $12,000, we need to use these new tools to increase automation, further reduce friction and lower lender costs. And we’re working on that, but it’s not the low hanging fruit we should be talking to lenders about now.

The low hanging fruit for AI

Despite all the technology lenders have deployed over the past three decades, mortgage is still a very paper-intensive business. The most convenient container for the exchange of information between two parties in one of our transactions is still via a PDF.

For a technologist, this is incredibly frustrating.

But where there is frustration, there is opportunity. We may not be able to take the PDF out of our process, but what about the human who has to read it? That’s an opportunity we’re taking advantage of currently.

In May at our annual Ascent User’s Conference, we released the general availability version of MCP 3.1, which includes an AI-powered PDF data extraction tool. Using advanced Optical Character Recognition (OCR) and AI data processing with machine learning, we’re able to pull accurate data from PDF forms and route it automatically into the MCP LOS.

This is the first, best use of AI in mortgage and it’s saving lenders a lot of time. In our business, time is money. Our confidence scores today are around 90% and they are getting better as the system learns.

This is a perfect example of capitalizing on an opportunity without getting caught up in the hysteria of what it might one day be able to do by focusing on what it can do for our industry today.

By Jim Rosen, EVP, Services at Mortgage Cadence 

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Mortgage Cadence: 
Alison Flaig 
VP, Marketing 
(919) 906-9738