Lenders dabble with ChatGPT as FTC begins OpenAI investigation

With the news of the Federal Trade Commission opening an investigation into OpenAI and its technology ChatGPT's potential harm to consumers just this week, it appears that the tool faces its first serious regulatory hurdle just as mortgage professionals are beginning to embrace it. 

Since the technology's debut last year, real estate players have rushed to boost their artificial intelligence bona fides. Redfin and Zillow have incorporated ChatGPT plugins to serve prospective homebuyers, while some lenders have touted their own AI chatbots. 

But ChatGPT specifically has already suffered from one security vulnerability exposing chat history titles of other users. The FTC says it intends to investigate whether OpenAI "engaged in unfair or deceptive privacy or data security practices or engaged in unfair or deceptive practices relating to risks of harm to consumers."

Cybersecurity firm Cyberhaven earlier this year suggested 11% of the data employees paste into the software is confidential. 

Massive tech players and mortgage giants like Wells Fargo and JPMorgan have placed restrictions on ChatGPT in recent months over concerns that confidential data could be exposed. The Mortgage Bankers Association said it doesn't have specific guidance around ChatGPT. The National Association of Realtors said in a statement one of its goals is to create policies on AI use and educational materials for Realtors, but the work is in its infancy. 

Lenders who spoke with National Mortgage News said their companies don't have specific policies around use of chatbots but are proceeding with caution. 

"If people were going to start [using personally identifiable information] then yeah, you need to have some policies and procedures," said Kristin Hess, a mortgage loan originator with CMG Home Loans in Middletown, New Jersey. "But I don't think we need to go that deep. I don't think we need to just put that much detail in."

Hess posted on LinkedIn in June a certificate that she'd completed an introduction to ChatGPT course online with edX, an online platform that offers training courses. She uses ChatGPT like Google to find more relevant search results and to write unique marketing posts. But she doesn't enter what she described as customers' six points of financial and personal identifying information including names and Social Security numbers.

OpenAI's potential use of personally identifiable information that has been entered into ChatGPT is at the heart of the FTC's investigation.

"Whoever's information is in prompts that you give ChatGPT, they didn't necessarily consent for you to do that," said Jordan Roe Bingham, CEO of LendSafe, a Salt Lake City-based cybersecurity company. "You are giving that information to the company that owns a chatbot and they're using that for their own reasons and their own purposes."

Mortgage professionals should stick to doing generic, non-PII type of work in open AI models, said Rutul Dave, co-founder and chief technology officer at mortgage fintech Maxwell.

"You cannot just say, 'Alright, I'm going to offload this [information] to some other third-party and then I'm just going to get the benefit of it," said Dave. "That doesn't work in the highly regulated, compliant industry that mortgages are."

Raymond Grewe, a branch manager for Paramount Residential Mortgage Corp. in the Greater Baltimore area, said he uses ChatGPT sparingly, but not for many mortgage functions. He said he's used the chatbot for scripting messages. Other lenders said they have used the chatbot to check grammar and edit paragraphs of text.

"I always feel weird about putting third-party information into a system like that," he said. "I personally used it for creating some scripting." 

ChatGPT has limited information beyond 2021, and can't provide users answers about current mortgage rates or home prices. Grewe expressed interest in Bing AI, the new AI chatbot tied to Microsoft's search engine that can provide real-time information. Microsoft is also a $10 billion investor in ChatGPT.

Grewe said he's an "early-to-mid" adopter of ChatGPT, and said his firm leans into tech heavily, a distinction amid a generally tech-averse industry. Grewe questioned aloud whether the technologies could eventually replace loan officers, or at least help speed the mortgage underwriting process.

The industry's biggest lenders haven't publicly integrated ChatGPT into their operations, while smaller entities like InstaMortgage have enhanced their own AI for customers. ChatGPT may not be ready to originate a mortgage, but originators will continue to utilize the chatbot. 

"I'm authentic. I do create my own content," said Hess. "That's how this ChatGPT has really helped me because now I have what I want to do, but maybe I don't know the proper wording for it. So that'll help me so I can connect with the right people...It's the way of the future and I don't want to stay stagnant in the past."