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Artificial Intelligence for Mortgage Lenders and Servicers

Artificial Intelligence for Mortgage Lenders and Servicers

The buzz about artificial intelligence (AI) and its impact on a wide-range of industries is hard to miss. From the ability to diagnose diseases, to the development of driverless cars, the potential applications of AI are extraordinary. In our daily lives, we are already experiencing the use of AI when we communicate with customer-service chat bots, ask Apple’s Siri for information, perform Google searches, or use navigation apps to help avoid traffic.

The more recent interest, innovation and investment in AI are due to a combination of factors – including greatly increased computational power, big data, greater infrastructure speed and scale, open source technologies, and advancements in machine learning techniques.

And today, the mortgage industry is able to reap the benefits of this incredible technology. Black Knight is now offering AI and machine learning-based capabilities specific to the mortgage industry. We have built a platform that completes business tasks using synthetic read-and-comprehend analysis and conclusion skills, and applied these capabilities to the loan origination process.

What is Machine Learning?

The terms “machine learning” and “artificial intelligence” are often used interchangeably, however, there is a distinction between the two. Broadly, artificial intelligence replicates human reasoning through learning, problem-solving and pattern recognition. Machine learning is a subset of AI and is a process by which AI deepens its knowledge through continually performing tasks and processing information.

Let’s consider a simple, industry-specific example. AI-powered machine learning technology can review thousands of paystubs and determine exactly where the pertinent income data is located. When the system comes across a paystub that presents an anomaly, it will apply its previously gained understanding to infer the location of the income data needed. Once the technology receives feedback that its inference was correct, it incorporates that information into its knowledge base. The next time it comes across that type of paystub, the system will automatically know where to find the pertinent data.

Machine learning also leverages big data to gain insights. The more data that is collected and reviewed, the better machine learning solutions become at making predictions.

The Future Is Limitless

AI and machine learning offer tremendous potential to advance the mortgage industry, and we are just beginning to experience the technology’s capabilities. As AI-powered systems ingest more data and perform an increasing number of tasks though machine learning and other techniques, the possibilities are unlimited. The average cost to originate a mortgage loan is exceptionally high – today it is roughly $7200 according to the Mortgage Bankers Association’s Quarterly Mortgage Bankers Performance Report, and the typical time to close a loan is around 40 days. Any opportunities to reduce costs and increase process efficiencies will add value to lenders and consumes.

What’s more, the transformative power of AI doesn’t stop in the originations space. Servicers will also be able to reap the benefits of this advanced technology. For example, the technology could learn how to detect risk and any compliance issues before they occur, enhance loss mitigation decisioning, provide voice integration capabilities to help staff work faster and smarter, and so on. What’s amazing is that these examples only scratch the surface.

Of course, human interaction will always be needed to originate and service loans, as people will still decide how they want to leverage technology and determine the problems that must be solved. Humans must also still play an active role in loan decisioning, identifying which kind of data to consider and determining risk appetite. Furthermore, research indicates that despite all the advances in point-of-sale technology, consumers still want the comfort of human interaction at some point in the process of purchasing what is their largest and most important investment.

AI and machine learning offer great promise and will likely usher in a new era of production excellence. Lenders that take advantage of this advanced technology will be choosing a bold new way to address origination costs, improve turn times and transform their origination processes to support a more successful future.

Read more in our upcoming part two of this series.