How the mortgage industry embraced generative AI in 2023

December 27, 2023 4:59 AM

After beginning 2023 as a development to watch, artificial intelligence exploded in popularity to become the headline news of the summer, with its impact on every aspect of society seemingly dissected.

The mortgage industry took notice, particularly when it came to ChatGPT-like generative AI, which is more likely to employ language-learning models and human-like interaction. At the same time, concerns over its role in banking and lending grew and caught the eye of numerous regulators. While few questions have been answered surrounding future policies governing AI within lending, many companies in mortgage and housing industries are wasting no time to test its capabilities, proceeding cautiously in order to be among the first to influence tools that could transform how businesses operate.

Whenever adopting AI, though, any enterprise in consumer financial services should expect increased scrutiny, after the Biden administration issued an executive order in October aimed at curbing misuse.

Here is a rundown of how mortgage lenders and the counterparties that serve them tried to carve out their own niches within generative AI in 2023 in the past 12 months.

Chona Kasinger/Bloomberg

Big Purple Dot integrates ChatGPT into CRM

Big Purple Dot, a real estate marketing platform, moved to integrate ChatGPT into its customer relationship management ecosystem in late spring, making it among the first in the mortgage industry to test the capabilities of generative AI.

Among its many tools, the Irvine, California-based company's chatbot could instantaneously answer queries and write extensive creative literature, whether it be poetry, press releases or LinkedIn posts, for marketing campaigns.

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Jakub Porzycki/NurPhoto/Photographer: Jakub Porzycki/Nur

Zillow, Redfin introduce ChatGPT plugins

The real estate platforms were not far behind to roll out tools created with the assistance of OpenAI, the artificial intelligence research group behind ChatGPT. Both companies' plugins were made available to selected users of the AI platform, with waitlists open for future sign-ups.

The tools allow consumers to share specific characteristics of their desired property types, including price range, room count and neighborhood amenities. ChatGPT responds with a list of matches drawn from the respective brokers' databases, bringing to buyers' attention potential homes they might otherwise miss using other search methods.

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Lenders court Gen Z with ChatGPT-like tech

Home lenders today not only have to attract new borrowers, but they have to retain them for referrals or future business down the road. When it comes to both tasks, there is a particular challenge in reaching younger generations, and the key to solving it is knowing how to communicate with them using data and technology.

One thing some mortgage companies may do to engage younger borrowers who prefer digital content and talking to devices is to experiment with using a personified version of ChatGPT, with the assistants answering prospective customers' questions, lenders are finding.

"It allows a chatbot to take a more human-like form and be more conversational, not just with text, but also voice," said Shashank Shekhar, founder and CEO of InstaMortgage.

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How mortgage AI chatbots stack up against ChatGPT

With the rise of ChatGPT early in the year, several mortgage companies released internally trained AI chatbots to work with customers on the questions that didn't require expertise of a licensed loan officer.

We compared the most prominent of these bots to ChatGPT by testing how well they give a quote to a prospective borrower.

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Beeline rolls out an AI chatbot named Bob

The bot, launched in early July, was in development for over five months, according to Nick Liuzza, the CEO of Beeline. As conversations around ChatGPT and AI gained steam in the first half of the year, leadership at the digital mortgage lender believed having an AI-powered solution such as Bob would set it apart from the competition.

"In January we started thinking how we can [make our platform] better and realized that 60% of our applications come in after hours or weekends, so that means people are shopping for mortgages when everyone's sleeping or on the weekend," Liuzza said.

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How mortgage AI chatbot developers aim to ensure regulatory compliance

As artificial intelligence appears poised to play a larger role in the home lending industry, some companies are trying to create their AI strategies in what are largely uncharted regulatory waters.

While real estate companies have taken advantage of generative AI chatbots as plugins to their own home-search platforms, few mortgage lenders and servicers have joined the bandwagon by using ChatGPT-like tools in a consumer-facing capacity amid concerns of noncompliance. In a regulatory environment that currently provides few clear-cut rules but frequent warnings about possible enforcement, companies designing AI-enabled communication find themselves in a situation comparable to building an airplane while trying to fly it.

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Blend debuts AI Copilot tool to improve LO workflow

Blend Labs launched an artificial intelligence tool that can process mortgage application data for a loan officer and ease communication between originators and borrowers.

The firm's Copilot platform can review a customer's financial profile, share pricing scenarios including closing costs, run the information through underwriting software and draft a pre-approval letter, said Nima Ghamsari, founder and head of Blend. The fintech debuted the tool at its customer conference in September, initially sharing it with clients through a waitlist.

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Rocket Mortgage's new AI tool is part of a broader plan

Rocket Mortgage is continuing to evolve in its use of artificial intelligence, testing an AI chat interface in its search engine used by its loan officers, brokers and underwriters to find answers to questions that arise during the loan origination process.

Early tests showed a 69% increase in speed to resolution compared to the current process, said Brian Woodring, chief information officer at Rocket Mortgage.

The search engine, named Pathfinder, was initially built to aid team members and partners in finding information on guidelines and regulations that are constantly in flux, but it "was a very manual process and there was a sense that you kind of had to know what you were looking for – the art of finding," said Woodring. That's where AI now comes in.

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Redfin's new AI tool turns buyers into interior designers

Redfin rolled out an artificial intelligence tool that gives potential homebuyers a glimpse into what the interior design of their future house could look like.

The tool, dubbed Redfin Redesign, allows consumers to change the appearance of walls, floors and countertops in home photos displayed on the brokerage's website. It was created in collaboration with Roomovo, a home visualization platform.

Redfin hopes the tool will "empower home searchers to envision the potential of a home" and to "identify which homes they are serious about touring or buying."

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Rocket makes AI-powered home search tool car-friendly

Rocket Homes' iOS application has been integrated into Apple CarPlay to help consumers house hunt while they're driving.

Home buyers interested in viewing nearby properties for sale in between running errands can pull Rocket's app up on their vehicles' console screen to see available listings, the real estate brokerage division of Rocket Companies said.

Properties will pop up in the "nearby" tab of the app and customers can choose to navigate to the house of their choice, call their real estate agent or save the listing to their "favorites." Homes that show up on a car's screen are curated by Rocket's app, which uses artificial intelligence to sieve through homes for sale and recommend what it thinks will be fitting for a potential buyer.

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