LoanLogics CEO says firms resisting AI adoption are not managing risk, but are creating it instead
New AI tools aimed at the mortgage industry are coming out constantly. Lenders and brokers are adopting them broadly, looking for ways to make processes faster and more efficient for themselves and their borrowers. The challenge for many is not whether to use AI but which tools to use and how to implement them responsibly.
Not everyone is ready to make that call. Some in the industry remain hesitant, held back by concerns about data security, implementation costs, uncertainty about which technology is worth the investment, and questions about whether AI can meet the regulatory standards mortgage lending demands.
One executive who has spent years working through those questions says the hesitation is understandable, but that the companies refusing to engage with AI at all are taking on a different kind of risk.
Dave Parker (pictured top), CEO of LoanLogics, said he sees the full spectrum of responses across the industry, from aggressive early adoption to blanket restrictions.
"The hardest thing folks say is, 'I don't want any AI applied,'" Parker told Mortgage Professional America. "Then you have a literacy issue. People are dictating where you can use AI or not use AI. But I actually don't think it's really that easy. You've got to be able to tease this apart and truly understand. They mean well. They're mitigating risks. But you truly need to understand what the types of risks are."
AI adoption starts with literacy
Parker said his own approach starts with literacy. He said the only way to become more literate is to have hands-on experiences with technology to determine both strengths and weaknesses.
"You've got to interact with it, and you've got to understand its capabilities," he said. "I haven't seen anybody who has interacted with it that isn't a bit wowed by what comes back. It creates proposals, presentations, tiering analysis, and market segmentation analysis. It is truly amazing what you can ask it to do and how quickly it comes back."
Some guardrails are necessary to ensure successful tech adoption. Parker said companies getting into AI without proper governance around data and PII are setting themselves up for problems they have not anticipated yet.
He also said it was important to have someone at your brokerage to have a big-picture perspective on where tech is most beneficial. Companies need someone looking at how products should evolve, and someone else looking at internal operations. He is particularly skeptical of companies that treat AI adoption as a gradual, step-by-step process.
"I'm very concerned about stair-step approaches because AI is more of a leapfrog technology," he said. "I don't know if the laws of incrementalism really fit when you're looking at AI. It's more of: what's the futurescape look like now that I have this? And we see that as being able to really catapult us and our customers, not to the next level of automation, but to skip levels of automation."
What it means for brokers
Parker said the companies with the most to gain from AI are not necessarily the largest ones. Smaller lenders and brokers have historically struggled with complex or niche loan products because they lack the staffing and systems to handle them confidently.
Of course, when dealing with an industry like mortgage lending, which is highly regulated, accuracy is paramount. Having the right answers is important to homebuyers as well, involved in the biggest transaction of their lives.
"If you're going to be in business outcome automation, then you better be right," Parker said.
The loan products that smaller brokers have traditionally avoided are a good example. Some types of loans go unused simply because originators are not familiar enough with them to feel confident.
"There are bond loans and housing programs in various states that people don't interact with much because they don't understand them, they're not familiar with them," he said. "But now with AI, it makes it such that I could do that with much more comfort."
Becoming more comfortable with these more obscure programs will not only help mortgage brokers close more deals but also allow homebuyers to access products that might better serve their individual situations.
"I think it's going to benefit customers by getting better products," he said. "I think it's going to benefit originators by being able to provide the right products to the right customers based on what their needs are. And it certainly accelerates the process. It makes it so that smaller entities can be more sophisticated in the mortgage space."
Parker said the companies embracing technology now will be the ones that will be hardest to catch later.
"If you don't build up that literacy and truly understand it, then you end up putting the company at risk for people who do figure it out faster," he said. "To me, it's how fast you can learn and apply and mitigate any of these risks that come up. That's where you've got to be sophisticated."
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