Kevin Wheeler, Senior Data Analyst

Data, AI and the Future of Mortgage Technology

I recently joined PromonTech as a Data Engineer and – for the first time in my career – I’m working in the mortgage industry. I was attracted to the role because of the incredible data- and process-complexity. The almost infinite volumes of data provide both opportunities and challenges. How do we ensure the quality of data – its overall integrity (lineage, security, privacy), accuracy and completeness?. For me, full data transparency and availability are the keys to – and the foundation of – innovative technology solutions.

In the mortgage space, the cost to originate a loan has increased dramatically in recent years – from about $3,000 before 2008 to over $9,000 today. Lenders are facing margins that have been stretched so thin their mortgage operations are no longer profitable. And, while it feels like everyone knows technology is the answer, it can be challenging in this climate to drive industry investment in technology. But, to return to profitability, we need to embrace and deliver the right technologies to reduce costs, automate processes and attract customers with intuitive user experiences.

The tech world is actively exploring emerging technologies like artificial intelligence (AI), machine learning (ML), and blockchain. But, in the mortgage industry, most of these are still just buzzwords. We need to build a foundation for these technologies to become a reality. While there is a lot of industry enthusiasm around new technology, we need to resist the urge to skip steps. We can’t overlook the importance of foundational tech principles upon which complex technology is built and we can’t apply innovative technology to a fractured system.

The residential loan data we’re collecting today is poorly standardized and is not adequately protected, preventing technologists from leveraging it fully. As we know, data is being lost between various systems throughout the loan journey (think - originations, secondary market, and servicing). Everyone is eager to see emerging technologies solve industry pain points, but carefully collected and curated data is critical to facilitating AI- and ML-based solutions.

As we all know, there is no shortage of problems with how the mortgage industry operates; decades of confusing processes, rules, and regulations are layered on top of each other. Many of the mortgage tech solutions we see today focus on tackling different challenges in the mortgage process. While these solutions solve complex problems, they don’t address the underlying issues. Without a uniform, standardized process, these solutions require unique integrations. As a result, they will forever need to be customized for individual companies and users.

In March 2019, the Mortgage Bankers Association announced its investment in MISMO’s data-formats standardization efforts. The MISMO team will continue its pursuit of creating an industry-accepted standardized data strategy. The overall goal is to drive improved data integrity and transparent data lineage throughout all systems in the lending journey. There is a $2-million investment in this initiative, which, ideally, will start paving the way for a standardized approach to data and greater integration ease between systems. This project will encourage a common data interpretation and understanding between all parties. This is a key building block if it’s widely adopted.

We need to standardize processes and lay a data-rich foundation before we can begin to determine how to best apply innovative tech. Only then will we realize the full potential of emerging technologies in creating meaningful mortgage solutions.

In the 19th century the world underwent an industrial revolution that shook the core of how people lived. We were able to extend our strength, speed, and stamina to a previously unfathomable level and with it came massive shifts in economic output and quality of life. Now, in the 21st century, we are in the midst of an information revolution where we are extending our intelligence, memory, and callback – our greatest natural tools by orders of magnitude more than our physical strength. Because of the qualities we’re expanding I believe the economic outputs will be orders of magnitude more as well. We’re only at the beginning of what is possible in the mortgage industry due to its lag in technological adoption. Still, even now, we’re starting to see technology shift our industry climate. Many of the innovations on the horizon are dependent on our dedication to industry data and standardization. Done right, we have the opportunity to be true discoverers of innovative AI- and ML-based solutions.

READY TO SEE US IN ACTION?