AI is about as big a buzzword that has ever existed in the mortgage industry, on par with automated underwriting, cloud technology, and digital mortgages. Indeed, AI is intrinsically tied to these innovations. AI tools enhance automation, can be delivered through the cloud, and would significantly improve the production of digital mortgages. At the same time, AI is also one of the least understood terms in the mortgage industry. This fact is keeping most mortgage industry participants from realizing its full benefits.
Loan underwriting is the process of evaluating a loan application to determine whether the loan should be funded. The process often starts with a potential borrower walking into a branch office and requesting a loan to purchase or refinance a home. A processor asks the borrower to fill out an application, setting in motion a lengthy information-gathering process in which as many as 1500 data-element pieces will eventually be collected. This loan information includes items about the borrower's employment, income, assets, liabilities, and monthly expenses. During the process, a credit report and appraisal will be ordered from a third-party vendor.
Countrywide loan-underwriting expert system (clues) is an advanced, automated mortgage-underwriting rule-based expert system. The system was developed to increase the production capacity and productivity of Countrywide branches, improve the consistency of underwriting, and reduce the cost of originating a loan. The system receives selected information from the loan application, credit report, and appraisal. It then decides whether the loan should be approved or whether it requires further review by a human underwriter. If the system approves the loan, no further review is required, and the application is funded. clues has been in operation since February 1993 and is currently processing more than 8500 loans each month in over 300 decentralized branches around the country.
Google has announced the launch of Lending DocAI, a dedicated artificial intelligence (AI) service for the mortgage industry. On Monday, Google Product Manager Sudheera Vanguri said the new solution, now in preview, has been designed to transform unstructured datasets into accurate models able to speed up loan applications by accurately assessing a borrower's income and assets. To streamline the loan application process, dubbed "notoriously slow and complex" by Vanguri, Lending DocAI has been built with AI models that specialize in document types related to loans and is able to automate "routine" document reviews so mortgage providers don't have to. The executive says that in turn, this will speed up the mortgage and loan application workflows, including the processing of loan sources and mortgage services. Lending DocAI can be applied to a range of documents including tax, income, and asset statements, capturing valuable data and potentially reducing the complexity of applying for a mortgage -- both for providers and hopeful borrowers.
The idea of the paperless office has been around for decades yet few companies have been able to achieve anything close to this idea. With all the technological advances we've had, why is it still so hard for companies to move away from their people and paper based processes? It may come as little surprise that organizations are still awash in paper. However, for companies looking to gain insights and extract value from their data, they need to get that data into a state where computers are able to process it. To do that, companies need to digitize and digitalize their information and processes.