In a time when many industries (e.g., insurance, banking, marketing) are spearheading a technology-forward, artificial intelligence-assisted movement, the mortgage origination process remains a complex, time-consuming and labor-intensive practice. Although the industry has made good-faith efforts to embrace digital advancements, the reality is the mortgage industry has yet to overcome the challenges of long timelines and overworked staff.
Mortgage originators and businesses are frequently met with outdated mortgage technology and mundane processes that create bottlenecks. These delays can extend loan closing times to 45-60 days, frustrating both lenders and borrowers. It’s time for the industry to embrace AI-powered loan origination to solve these bottlenecks, but not at the risk to the hardworking professionals of this business.
It’s reasonable to fear that AI will replace jobs, as that seems to be the social narrative since ChatGPT exploded onto the scene in November 2022. The reality is that AI in mortgage origination should be considered to enhance productivity, enabling mortgage professionals to focus on more critical tasks.
“In the 1980s, accountants feared that Microsoft Excel would replace human accounting. Fast-forward 40 years, and Excel has become an essential tool in financial services, augmenting the work of talented accountants.”
For example, in the 1980s, accountants feared that Microsoft Excel would replace human accounting. Fast-forward 40 years, and Excel has become an essential tool in financial services, augmenting the work of talented accountants. AI can transform the mortgage landscape without unrealistic promises by focusing on immediate, actionable benefits.
Factory line
The mortgage origination process is fundamentally complex, with multiple loan types, exceptions and outlying scenarios to consider. Originators, processors, underwriters and closers are faced with an industry that remains paper-intensive and takes a assembly-line-style approach to loan origination — even in 2024.
Many loan files consist of thousands of pages, droves of data and multiple stakeholders, leading to time-consuming closing times. The current process requires the following:
- Originators gather initial documentation and assist borrowers.
- Processors organize and verify information.
- Underwriters assess risk.
- Closers finalize the loan.
Don’t forget the administrative staff that often supports these roles, which adds to the complexity and robustness of the process and can be a contributing factor in delays. Despite advancements in digital tools, mortgage automation hasn’t emerged from inefficient processes fraught with bottlenecks. Outdated mortgage technology hasn’t made the strides to streamline the mortgage origination process in a way that can open up the loan origination industry as it has for other business sectors.
Initially, technology allowed the mortgage industry to digitize and speed up document handling, later leading to programs helping to automate communication between third-party systems. Still, today humans are heavily involved in many routine steps — like document review, fraud detection and underwriting. These tasks are critical but are extremely repetitive and are a complete waste of time.
Now, AI offers the next step forward. Unlike the limited technology that came before it, AI can handle complex, multi-step tasks. It ties together data from all these systems, allowing for more efficient workflows and reduces human involvement while enabling mortgage professionals to focus on higher-level decision-making. AI isn’t about reinventing the process; it’s about optimizing the steps that already work.
Turning point
The rise of AI agents in financial services marks a turning point for mortgage origination. Unlike the general-purpose AI models that dominate headlines, AI in mortgage origination is task-specific, focusing on automating repetitive and time-consuming processes across every aspect of the mortgage process.
AI agents can act as virtual assistants, working alongside originators, processors, underwriters and operations teams to streamline workflows. Let’s go through how AI can help each of these professionals and their respective responsibilities
For originators, AI can summarize client calls, organize workflows and suggest personalized sales approaches. It can also provide support in managing borrower interactions, ensuring that no lead falls through the cracks. Ultimately, the suggested use of AI in mortgage origination here is in your customer service and relationships with your clients — not necessarily in helping you in your expertise as an originator.
For processors, AI agents can review loan documents, verify information for accuracy and detect potential fraud. They can also automate communication with borrowers, drafting emails and requests for missing documentation, freeing processors from these tedious tasks. Imagine a world where you get more time to create solutions to these problems versus identifying the problem themselves.
AI can revolutionize underwriting by pre-underwriting files, flagging potential issues and suggesting solutions based on historical data. This will allow human underwriters to focus on outlier cases and complex files, significantly reducing their workload and reducing mortgage processing time.
For closers, AI agents will help conduct final file reviews, ensuring all documentation is complete and in compliance with regulatory standards. Think of it as a second set of eyes to ensure accuracy and thoroughness. Leveraging mortgage automation in the closing process will drastically reduce the need for human intervention.
And last, operations teams can benefit as AI can support regulatory audits, automating the collection and organization of necessary data. Additionally, it can provide real-time answers to routine regulatory questions. This helps ensure compliance without the need for manual research.
Remember, 45-60 days is the average time to close a loan. A shift toward AI-powered loan origination can reduce that time and create opportunities for mortgage companies to handle larger volumes of applications without increasing staff. Instead, your staff can be better allocated to tasks that require expertise and professionalism and not be stuck in the bog of busy work.
Competitive advantage
The future of mortgage processing is here, so the mortgage company that adopts AI-powered loan origination early stands to gain a competitive advantage. By integrating AI agents in financial services, mortgage origination businesses can scale operations and process more loans without requiring additional human resources. This not only reduces fixed human costs but also improves profitability, productivity and work culture.
Moreover, your consumers will benefit from AI adoption by experiencing shorter processing times and faster loan approvals. Early adopters of mortgage automation can offer clients the ability to close loans up much faster. For eager prospective homebuyers looking to purchase their dream home, that will be music to their ears.
In addition to speeding up the mortgage origination process, AI helps eliminate human error in mundane, tiring tasks, reducing the risk of costly mistakes. Early adopters of AI-powered loan origination can expect higher levels of accuracy and consistency, resulting in higher closing conversion rates and a better process for everyone.
Industry standard
AI is quickly transforming the future of mortgage processing, but it’s not here to take anyone’s job. Rather, AI in mortgage origination is going to enhance the efficiency and productivity of well-trained, knowledgeable, hardworking mortgage professionals.
By reducing the bottleneck and automating repetitive tasks like document review, fraud detection and compliance checks, AI allows originators, processors, underwriters and closers to focus on what really matters. At the end of it all, your client experiences faster loan closing times and a superior experience with your modernized loan origination business.
“AI in the mortgage industry shouldn’t be sold as flying cars, replacing jobs or any unrealistic outcome. Instead, it should be about harnessing AI technology to solve today’s mortgage industry challenges.”
AI in the mortgage industry shouldn’t be sold as flying cars, replacing jobs or any unrealistic outcome. Instead, it should be about harnessing AI technology to solve today’s mortgage industry challenges. As AI becomes the standard in every industry, now is the time for mortgage professionals to explore AI solutions to future-proof their operations.
