Mortgage execs placate fears of AI replacing jobs

Mortgage professionals, as they watch their employers adopt more artificial intelligence solutions, are worried the technology will marginalize them.

Nearly a third of respondents in an upcoming Arizent industry survey say they're concerned AI will cost them their job. Low-level mortgage staff, who perform some of the functions that could be replaced by AI technology, harbor the most fear, but executives also share some anxiety. As lenders, servicers and tech vendors plan more AI implementation, industry leaders are pacifying some of those concerns. 

"(AI) should make their work balance more enjoyable, more fulfilling, and it should be used to take care of the menial tasks and the things that eat time up," said Matt Lehnen, chief technology officer at Deephaven Mortgage. "That's what we should be looking at automating and removing from people's plates."

The lender utilizes AI in functions such as reviewing numerous bank statements for non-qualified mortgage applications. AI can discern patterns in an applicant's financial profile faster and more accurately than a human, but Deephaven's loan officers still have the final say in an origination decision at the non-qualified mortgage lender, Lehnen said. 

"If you think of what an underwriter's core role is, it's risk mitigation," he added. "That would be a very bad idea to automate that."

Artificial intelligence is used today in a variety of both back-end and front-end mortgage operations, such as data verification, lead acquisition and underwriting tasks. Real estate players in the past year have debuted customer-facing generative AI chatbots in response to the hype around ChatGPT, while experts have speculated the tech will accelerate industry blockchain use. 

Sixty percent of mortgage firms next year will have AI tools in place, according to professionals represented in Arizent's upcoming industry forecast. Of that majority, 47% say they already have such solutions in place. Most of the computing power will go toward origination activities, workers say, while firms will devote less AI attention to information technology and cybersecurity. 

In an industry where a fraction of mortgage lenders have previously admitted to using pen and paper for origination processes, AI skeptics remain. Heading into the new year, 17% of businesses won't utilize AI or look into use cases for the tech, survey respondents told Arizent. It's unclear how many of those non-users are the same personnel worried about being replaced. 

"If you don't understand it, if it's not something that you have personally interacted with, there's a fear factor of the unknown, right?" said Lehnen.

No matter an organization's strategy, some upheaval is likely. AI could replace upwards of 300 million jobs in the next few years, the mortgage industry included, said Katherine Campbell, founder of Leopard Job and former AnnieMac Home Mortgage executive. Campbell's new venture provides consulting services for firms adapting to a remote workforce. 

"Anything AI can do, typically a human being is miserable doing," she previously told National Mortgage News. "The more AI takes over the dirty work and we elevate ourselves to only what humans can do, the more satisfaction people will have in their lives."

Mortgage originations are far from being a fully-digital process, and industry specialists can mold new roles around AI, Campbell noted. Personnel with company knowledge can oversee the bots doing their tasks, for example.

Mortgage giant Mr. Cooper is a big believer in AI, but isn't replacing its experts with computers. The company uses the tech in fulfillment and due diligence roles, but takes a more cautious approach with AI in front office functions, said Sridhar Sharma, executive vice president and chief information officer at the company. Underwriters at Mr. Cooper use AI in a co-pilot mode, reviewing a computer's decision-making before moving forward. 

"I don't think the fear is that it will replace all our jobs," he said. "I think the way we look at it as an opportunity for our team members to handle twice the loans that we handle today."

The executive said Mr. Cooper grew from a $500 billion mortgage servicing rights portfolio to nearly $1 trillion with a relatively similar headcount, and said technology will be a big part of growing it to $1.5 trillion while retaining staff. 

Outsourcing, which lenders have turned to looking to contain costs in tight times, can also utilize AI, ironically threatening those jobs as well. As lenders enter what's expected to be a brutal winter for business, they could turn toward vendors to shave expenses. Sameer Ahluwalia, president and global head at Firstsource, a mortgage outsourcing firm, said his company is testing AI functions but is approaching automation for clients with caution, suggesting FirstSource isn't trying to become a software vendor for AI. 

"There will be a lot of jobs, new jobs that will come up and I don't know what those jobs are," he said. "We are all part of this ecosystem, discovering it, learning it, what those jobs could be but jobs are not going away."

To learn more about mortgage professionals' strategies around AI, tech and more, read Arizent's 2024 Mortgage Predictions report out Jan. 4, 2024.