AI, or Artificial Intelligence, is quickly becoming part of just about every corner of the business world, and the mortgage industry is no exception. Sites like Zillow, realtor.com, and Redfin have been assisting professionals and prospective homebuyers for several years in checking comps, taking virtual tours, and estimating values for refinancing, with new services being added as quickly as the need arises and can be met. As AI advances, how will it impact the roles of professionals in processing, underwriting, and funding?

Property appraisals are the latest sector in which the cost-benefit ratio of AI is being considered. Appraisals determine how properties are valued, and lenders take that valuation to assess risk. When rates were lower, there were fewer issues because market conditions were favorable for property values to increase. Now that there are more uncertainties about rates and a possible recession, GSEs like Freddie Mac and Fannie Mae are more concerned with loan quality and return on investment, leading to greater scrutiny of the appraisal process.

The debate between traditional and AI-driven property appraisals highlights a key industry dilemma. Human appraisers offer detailed, firsthand observations, but the process can be time-consuming and potentially biased. AI models provide speed and data-driven efficiency but may miss nuanced details, such as recent renovations or neighborhood-specific factors. Some advocate for eliminating human appraisals entirely, favoring standardized electronic models, while others are concerned about job displacement and the loss of human expertise. How will the industry meet the challenge of finding the right balance between technological advancement and maintaining valuable human insight? And what implications will AI have on other industries and the economy as a whole?

– Shaun Dennison (EVP Non-QM, OCMBC) discusses non-QM (non-qualified mortgage) products, which provide more flexibility for borrowers who may not fit traditional lending criteria.

– Wendy Van Wessel(Kind Lending) explores various strategies for leveraging home equity and alternative income verification methods.