The modern day mortgage industry is built around a sales framework, however as new technology is implemented, the industry’s next challenge will be to help borrowers understand the decisions they are making.
In the world of a lender, each day is met with an expectation of production and quotas all while the borrower searches for the most effective rate. This system has shaped the mortgage industry into a complex sales drives system.
However, this system worked, and worked well, until now.
AI’s role in virtually all industries has been staggering, and the rapidly advancing technology could lead to the role of a lender to extinction.
Prior to AI, a lender would assess a possible borrower’s qualification for a loan with factors such as income, credit history, processing paperwork, and more. The main objective of a loan officer is to determine “can this borrower be approved for this loan.” However with AI automating, this process is faster and at lower cost than traditional loan officers. Intricate AI systems can assess borrower risk, payroll providers, tax transcripts, and detect fraud within seconds.
Therefore, if the majority of the complexity is taken out of a lender’s job, what role remains?
The mortgage industry new and improved?
The role of a lender has the unique opportunity to shift into a navigation led position rather than primarily a sales position. This opportunity is in response to the rapidly changing role of lending officers.
Although, the mortgage industry is at its core a sales-driven industry featuring a highly competitive, commission-based environment to generate gain and that for the most part is unlikely to experience a 180-degree change.
Nonetheless, with the usage of AI, lenders have the opportunity to use their position to help borrowers understand the implications, assess risk, and how to minimize interest rate costs. This specific task is vital to support consumers to make sound financial decisions and avoid crippling interest rates.
Turning mortgage confusion into confidence
A study from the Consumer Financial Protection Bureau (CFPB) found that almost half of consumers don’t shop around for different mortgage products, further the process of obtaining a mortgage plan remains highly intimidating. That’s where lending officers can offer their expertise.
With how intimidating the mortgage process can be and the support needed to equip individuals with the knowledge necessary for sound financial decisions, the role of a lender has the opportunity to shift. Rather than having a sales-driven mindset, borrowers need lenders to have a navigation driven mindset.
This includes helping the borrowers shop for the mortgage rate that suits them best or informing them of any hidden risks. This will aid borrowers in understanding fiscal risk of certain mortgage plans and decode the confusion and fear associated with the mortgage industry.
An outline of the possible future
With the mortgage industry experiencing a time of deep change with the rise of AI use, lenders are put in a position to adapt or become obsolete. When consumers are given the resources necessary to make more informed and educated decisions, rather than having blind trust towards lenders, the industry itself can evolve into a more effective machine.
