How Will AI Change The Mortgage Market In 2024?

By ERIN FLYNN JAY

As artificial intelligence plays an increasingly important role in the mortgage business, industry leaders are figuring out ways to harness its power to revolutionize homebuying.

Dan Weisman, director of innovation strategy at the National Association of Realtors, said AI brings enhanced automation, efficiency, and transparency to the process. People who can effectively use it have the chance to dominate the landscape in 2024.

“With artificial intelligence rapidly entering our lives faster than most could imagine, the industry has opportunities to improve analyzing market trends, assessing credit risk, and ensuring regulatory compliance, which will lead to a more tailored lending experience,” Weisman said in a recent interview with The Mortgage Note.

For example, JPMorgan Chase is developing a ChatGPT-like service that will provide customized investing guidance. “The mortgage industry has the opportunity to do something similar, and 2024 is the year of technology transformation focused on the customer experience,” Weisman said.

Rick Sharga, founder and CEO of CJ Patrick Company, thinks AI-related technology is going to usher in some of the most exciting, foundational changes we’ve seen in the mortgage business in many years.

Much of the industry’s technology focus over the past few years has been on the front end of the origination process – creating products that allow consumers to easily apply for loans online. “But the advent of AI technology has a chance to dramatically change everything from which borrowers are targeted to how loans are underwritten and processed and even how they’re managed by mortgage servicers,” said Sharga.

Some lenders are already using AI and machine learning tools to streamline loan processing by using this technology to carry out routine, labor-intensive tasks that were previously done manually. In what promises to be another relatively low-volume year for lending in 2024, Sharga said the opportunity to leverage technology to dramatically improve productivity could be the difference between making a profit and losing money – or possibly even going out of business.

AI technology also has the potential to match ideal loan products with each prospective borrower based on the borrower’s financial profile, the loan amount, and potential homeownership expenses.

“An AI tool can sort through multiple scenarios in microseconds and make those types of recommendations. This ability to compare dozens, hundreds, or even thousands of potential loan products instantaneously could be an especially valuable tool for mortgage brokers, who work with multiple lenders,” Sharga said.

In mortgage servicing, Sharga said AI tools can be “trained” to look for borrower behavior that suggests financial difficulties – allowing the servicer to be ready with loan modification solutions to help borrowers avoid foreclosure – or that indicates a borrower may be considering a new home purchase, giving the servicer a chance to retain the borrower by reaching out early and providing the new purchase loan.

“Even on the marketing front, AI tools can help lenders more effectively deploy their advertising dollars by determining which prospective borrowers match up best with the lenders’ offerings, and better targeting advertising and SEO strategies to reach those borrowers online,” Sharga said.

According to ATTOM’s Chief Product and Technology Officer Todd Teta, there are five key ways AI will be used in the mortgage market in 2024:

Enhanced Lead Generation: AI will pinpoint prospects likely to seek mortgages, streamlining lead generation and boosting conversions.
Adaptive Pricing: ML algorithms will adjust mortgage rates in real time, capturing market demand and outpacing competitors.
Strategic Cross-Selling: By analyzing customer data, AI will identify up-sell and cross-sell opportunities, enhancing customer value.
Efficient Follow-Ups: Automated communications powered by AI will keep leads warm, shortening the sales cycle.
Market Sentiment Analysis: AI will analyze public sentiment, allowing lenders to align their sales tactics with market trends.

Major lenders are embracing AI-related technology, which they say is already transforming the market.

Varun Krishna, CEO of Rocket Companies, emphasized their focus on AI in a statement accompanying the third quarter’s financial results.

“In today’s climate, innovation is essential. With the incredible amount of data in our ecosystem, paired with the transformative power of AI, Rocket is uniquely positioned to disrupt the industry. We’re just getting started and can’t wait to show you what we are building to revolutionize homeownership,” Krishna said.

Brian Woodring, chief information officer of Rocket Mortgage, recently sat down with Editor Kimberley Haas to talk more about how Rocket is harnessing the power of artificial intelligence and machine learning.

In October, continued advancements to the company’s Pathfinder tool were announced. Pathfinder is an AI and machine learning-powered search engine used by more than 40,000 housing professionals, according to a press release.

“Pathfinder is our knowledge base that has all of the data that we know about the right way to underwrite, process, and fulfill a mortgage,” Woodring said. “It has regulations, it has investor guidelines, it has our own best practices.”

Woodring said new technology allows an interface with information that is not just language-based, but conversational, “where you’re literally able to converse with an AI that can give you contextual advice and can answer a series of questions on a related topic, clarifying questions that allow you to drill down to exactly the answer very quickly.”

Woodring said they are able to get answers about 69% faster than before.

Rocket is also working on becoming the world’s first AI-powered homeownership company.

“Really, bigger even than just mortgage,” Woodring said. “But mortgage is obviously a huge piece of that. And the way we see it is that the role that AI can play is in simplifying, streamlining, automating, and making the entire process much more confidence-inspiring for our team members, for our partners, and for our clients.”