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How COVID-19 is driving AI in the mortgage industry

In a remote-work world, tech creates a competitive advantage

The shift to AI-powered technology is rapidly taking over the mortgage industry with leaders turning to machine learning to increase efficiency amid COVID-19. With the move toward a remote workforce and the real estate market booming, this technology is an important way to create a competitive advantage. Artificial intelligence can elevate your customer experience, reduce reliance on labor-centric solutions and streamline decision making. 

In this discussion, John Heck, Senior Advisor of Lending Solutions for Capacity, sits down with Jim Albertelli, CEO of Albertelli Law, to discuss the unique ways AI can be leveraged in the mortgage industry.

John Heck: What are the benefits of an AI driven process to streamline and standardize data?

Jim Albertelli: When we talk about AI, what we’re really talking about is applying algorithms based on our knowledge and understanding of the industry to ingest information more consistently to help make better decisions. Over time, the data set grows and we can make better decisions based on that information.

A practical example is us working with Capacity in our call center. Part of our call center was really about developing a knowledge base and layering in AI to make better real-time decisions. Not only in deciding on the loan or the question that comes in and getting it into the right place, but replacing some of the less complex interactions and standardizing those interactions to allow us to make better decisions and assess our lending clients more effectively with fewer costs.

John Heck: Where do you see your strategic vision in regard to automating your helpdesk and the decision making? 

Jim Albertelli: We say that iteration is innovation, so we’re applying AI initially to the help desk functionality. This allows us to take in data that examines how consumers communicate. Do consumers prefer  Facebook Messenger or do they prefer some chat, email or even a telephonic conversation? Then we reach out using the appropriate methodology so we can start the conversation. 

With our reps, we have the ability to look at all of the different standards or responses and quickly glean that information out of that large knowledge base. Being able to provide better, more standardized information to all consumers alleviates some of the concerns around discriminatory effects and provides more transparency for your compliance team.

John Heck: What do you see happening in the future with people currently in forbearance plans?

Jim Albertelli: You have a group of borrowers who are actively participating. They’ve taken their second six months forbearance and it’s going to lead them into March. Then you have another group of borrowers that hasn’t done anything but because moratoria have been in place they haven’t had to do anything. It almost feels like they’ve got relief, but they really haven’t. And so that group is going to wake up in January, to a number of filings that will probably spur them to re-engage. Then that will burn off, in March or so and then the 120 day process will begin. 

I think you’re going to really see a couple of different waves. You’re going to see a January/February wave increase, another one in March/April and then ultimately, in July before it’s fully baked, and you get an idea of the new normal.

John Heck: Is there a way to avoid this potential wave? 

Jim Albertelli: PPP, as well as additional stimulus money, can certainly help consumers and lessen that burden. We’ve had some good job reports. If we could get some of these other industries started again, that could ameliorate some of the negative effects.

We could be looking at a 2% or 3% default rate, instead of a 1%. But some of that is going to be determined by what additional stimulus is made available and how quickly other industries, such as airlines and hospitality, come back.

John Heck: What are you doing with AI in these areas to be strategic about what’s to come? 

Jim Albertelli: We’re leveraging AI in a number of ways. Ultimately, we believe in the digital mortgage. When you have consumers, even intersecting in the call center, we’re developing the ability to decide at high volume around the various loss mitigation strategies. When you have all of the lending standards all digested, you really can become an active partner with the consumer.

So, we’re running the AI over portfolio retention, looking at the likelihood of a foreclosure in the future or the ability to re-perform. We’re digesting that information, and being scalable is really what we’re building between now and the end of the year.

John Heck: What’s something mortgage professionals should know about integrating AI? 

Jim Albertelli: What I really want people to understand is that you don’t have to change your system of record to interface effectively. AI can save time, help you with compliance and help you engage effectively with consumers. There are ways to get creative, to actually pay for it, to engage it, be very targeted. If you integrate AI even in a small way, you can get a big result.

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