One AI researcher-turned-mortgage CEO says loan officers are leaving a lot on the table
As new AI technology hits the mortgage market every day, it can become easy to overlook the existing tools in favor of something new.
The challenge of making sure brokers and originators keep up with the latest tech often puts them in a position where each new tool must be evaluated to avoid falling behind in the tech arms race.
One tech veteran who has gotten into the mortgage industry wants to make sure brokers aren’t overlooking the existing technology, which can be very useful.
Oren Michaely (pictured top), CEO and co-founder of Elio Mortgage, worked as an AI researcher at Microsoft before large language models (LLMs) went mainstream. He now runs a licensed mortgage brokerage built around the technology.
The barrier to getting started is lower than most brokers assume, he said. He led a session at AIME Fuse called "From ChatGPT to Broker Owner," aimed at giving loan officers tools they can use the next day.
"People don't realize how powerful the off-the-shelf tools are," Michaely told Mortgage Professional America.
Where the time goes
At Microsoft, he was exposed to early OpenAI models before ChatGPT launched. Later he became director of AI at the private equity firm Motive Partners.
"I was always extremely focused on real-world application of AI," Michaely said. "So AI that makes business impact, not AI for research purposes."
Coming to mortgage from outside the industry helps him question how the work is divided, he said. He credited the industry's biggest companies with being built for the right point in time.
"I'm extremely privileged to be new to the mortgage industry, so I can take a beginner's mindset on things," Michaely said. "So I don't need to take anything for granted in terms of, ‘This is what a loan officer is. This is what a processor is. This is what a closer is. This is what a loan officer assistant is.’ It's actually: how can we redefine the whole operating model around technology?"
Borrowers still need a person for the biggest financial transaction most of them make, he said. The routine work around it is another matter.
"You need a human to hold your hand," Michaely said. "You need to explain the complexity. You need to calm you down. But reality is that 80% of being a loan officer is logging into various systems, copying data, running calculations, kind of taking the mess of communication and data that comes in and organizing it and deciding where to put it."
The usual fix for that workload is more staff. The biggest brokerages were built around it, he said.
"You see loan officers hiring LOAs and LOAs and LOAs in order to be able to manufacture the files that come through," Michaely said.
The change reaches well beyond mortgage, he said. He expects it to cost some jobs and create others.
"It's a generational technology," Michaely said. "It's going to impact every single job that requires sitting behind a desk. There's going to be job displacement, but there's also going to be new job creation."
What Elio is building
Elio emerged from stealth on Sept. 29 with $5.1 million in pre-seed funding led by Motive Partners and Social Leverage. Jeff Horing, co-founder and managing director of Insight Partners, took part as an angel investor.
Arad Lev Ari, a former real estate investment banker at Deutsche Bank and KKR, co-founded the company with Michaely. Elio started by acquiring Hightide, a company founded by Stephen Carey, who joined Michaely on stage at the session.
"It's not only technology that we're rebuilding, but it's also the operating model, and that translates into unit economics, and that can completely change how loans are manufactured," Michaely said.
The funding will go toward product development, wider licensing and loan officer recruiting, the company said. As of late September, Michaely said Elio was licensed in 22 states and expected to reach 30 by the end of the year, and it had been growing about 20% a month.
One Elio loan officer used to spend 45 minutes to an hour taking applications by hand, he said. Now the borrower answers 10 to 15 questions and uploads documents, and the system pre-fills the 1003 for the loan officer to review and send.
"Our loan officers are becoming air traffic control, and they have a team of specialized agents working for them," Michaely said. "And then they need to approve, reject, edit."
Elio's goal is to pre-underwrite every file so lenders such as UWM get clean ones back, Michaely said. The next milestone is $1 billion in origination.
"We succeed if AI is invisible," Michaely said. "Because there are humans in control, they're making decisions, but the whole operating model just works better."
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