AI Advancements Leading the Charge

Brett Brumley is CEO of Lender Toolkit, a provider of automated mortgage technology solutions powered by artificial intelligence (AI), offering innovative and comprehensive solutions that streamline the origination process for mortgage lenders.

Under Brumley’s leadership, Lender Toolkit has doubled in size since he founded the company seven years ago. Today, it works with hundreds of lenders of all sizes—including many of the top 50 lenders in the country—representing more than $45 billion in loan volume.

MortgagePoint had a chance to catch up with Brumley to discuss the future of the industry, and discuss the evolution of the marketplace as advances in AI continue to change the way businesses is conducted.

Are there any trends in technology you are witnessing being employed by the industry to streamline operations?
Brumley: It’s pretty clear that a growing number of lenders are taking today’s market difficulties as a serious opportunity to ramp up their investments in technology. Industry adoption of our AI Underwriter platform, which utilizes AI to make underwriting decisions directly with the loan originator in less than two minutes, and our Prism solution, which is integrated with agency guidelines and streamlines borrower income calculations, has been nothing short of amazing.

If next year’s market turns out to be as challenging as I think it will be, the use of emerging technologies like AI and machine learning technology will continue to expand, out of necessity, if nothing else. Creating a new experience for consumers and referral partners through new technologies will drive more opportunities than focusing on technology that has already been implemented, such as a CRM or POS. Unless lenders find ways to leverage new technologies to do more with less, they’re at risk at being left behind.

As artificial intelligence (AI) and machine learning (ML) continue to advance and evolve as everyday tools for the industry, will we ever be able to rely 100% on these tools or will the human touch always be a necessary part of the origination process?
Brumley: Artificial intelligence will continue to be critical to the mortgage business. In fact, my company has developed AI-powered technology to create a completely new borrower experience while also increasing profits, streamlining operations, drastically reducing cycle times and helping lenders achieve more while using fewer human resources. This will be critical as volume increases and lenders adapt to the new market with fewer resources available to them.

Having said that, I believe that consumers will always want a human touch when it comes to financing their homes. Buying a home is often an emotional experience and the largest purchase a consumer will make. If we can consistently deliver a clear-to-close loan in seven to 10 days, then working with highly qualified experts that understand the lender’s technology and services is even more important. They will need to provide immediate and detailed feedback and prepare the consumer for a fast closing. This has historically happened over a 30-day to 45-day period. Providing highly accurate information upfront, while delivering the mortgage experience you want to create for the borrower, will be vital to a lender’s success.

Borrowers also want lenders to help them make the right decision, based on their unique personal finance situation. Mortgage experts can listen and reassure borrowers if they face challenges in the mortgage process, especially when it’s happening much more quickly than ever before.

And savvy lenders also know that borrowers want their mortgage process to go off without a hitch and on time. They appreciate that leveraging AI in the origination process will help make that happen. Ultimately, I believe creating the best borrower experience is finding the right balance of using AI-powered technology to streamline the mortgage process along with having the right mortgage professionals to guide the borrower.

What’s in store for the housing market as we enter 2024? What are some of the headwinds that the industry will be faced with in the coming year?
Brumley: The most obvious headwind lenders will face next year is the declining number of new loan applications, which have been nearing historic lows, according to recent surveys from the Mortgage Bankers Association (MBA). I don’t think the floor has yet been reached, but industry experts expect to see a stabilization of the market in the first quarter of next year. As the loan pipeline is shrinking and the number of lenders has broadly remained the same, it will be critical to differentiate yourself from your competition in new and unique ways to appeal to those that are still in the marketplace.

While challenging, this presents a unique opportunity for lenders to grow business via consolidation and acquisitions. Many smaller lenders will turn to those that have larger balance sheets and infrastructure to drive growth.

Rates are obviously another obstacle. A dip in rates might provide some relief when it comes to affordability, but even if rates do fall, they will not return to the lows we saw in the past few years that drove booms. The steps lenders are taking now will dictate how much of the potential volume they’ll be able to capture when rates do drop.

Another major factor is the economy, specifically job employment and income growth. The good news is that the labor market and overall economy are relatively strong, but credit availability has been tightening, which could impact the market next year.