Will AI replace the loan officer?

There have been countless press releases and news articles about how AI is changing the mortgage industry. The industry fears AI will ultimately replace everyone, from operations to loan officers. As a loan officer, I am not losing any sleep, and here is why you should not, either.

Recently, I was online researching a very prominent real estate coach. He has a huge following and commands top dollar when he speaks. I was curious about what he was doing as I always looked for ways to improve my client experience. On his X account, he had a link to his AI assistant, who was supposed to help manage me, the client. I thought, wow, this will be amazing, and maybe I will implement it in my business to improve customer service. Now, remember that this is a top coach, and he is using this technology across his platforms to increase conversions.  

The experience was terrible. It was akin to pressing buttons on the phone to get to the correct department, but it was always sent back to the main menu. I sat playing with it, getting increasingly irritated as the minutes passed. Here are a few of my thoughts

“I understand this AI assistant saves you money but wastes my time.” 

“This thing is not answering questions properly and is moving me, the buyer, further and further from the sale.”

“He must have ownership in this as it is a pos.” (and no, I did not mean point of sale)

“Anyone who uses this technology in the mortgage space I can take business from instantly.”

Pay attention to that last thought because that is where I see the opportunity for loan officers in this upcoming AI vs. loan officer game; we will see low-end mortgage companies attempt in the future. I say the low end because you treat your clients as lesser when you strip the human element from home-buying. Buying a home is one of the most significant purchases people will make and the most emotionally charged. Regulating people to a bot is akin to saying your feelings do not matter, your concerns do not matter, I am going to save a buck, so you better suck it up. I know such harsh words from such a refined lady, but seriously, how does this benefit the borrower?   

Some would argue they can offer a lower-cost mortgage if they do not have to pay loan officers, but can we step back and look at how honest and realistic that is? Call centers pay their loan officer vastly lower amounts than a broker or retail lender makes. Do borrowers calling call centers always get a better deal? Absolutely not. I have two HUGE call centers that immediately spring to mind as charging borrowers dramatically higher rates and fees than I do every day. Assuming that because something costs a mortgage company less, they will pass the savings onto the client is a historically disproven assumption.

Now, may a few offer a lower rate and fee at first? Sure, but once normalized, I expect those savings to disappear as they did with many call centers. Go to any American airport to see technology at its finest, with millions of Americans tagging and checking their bags for zero savings for them.  Airlines have reduced costs by having consumers do the work. A tale as old as time.  

The other issue is that, ultimately, it will not be a lower cost. Loan officers cost money, but so does advertising. If you strip away the loan officer, the only people who win are the ad platforms, lead generators, and megacorps. It will not come down to process, service, or expertise but rather whoever has the biggest wallet. That alone should terrify every mortgage company that is not Rocket or Zillow because there is no way they will be able to compete with the wallets those two have.  

Is there space in the mortgage industry for AI? Yes, 100%! We are already seeing AI make the process faster, easier, and a better experience for the buyer when paired with an expert loan officer. The key is that when used as a tool by experts, AI can result in a fantastic client experience for both the short and long term. You can increase customer loyalty and trust. But once again, the key is AI paired with an expert.   

Personally, would I want to get my mortgage from a bot? No, I am an expert lender, but even when I buy a house, I need that voice on the other side to give me a perspective I had not considered, to share top tips with me, and to get me to the finish line of sanity intact. I need to know that if there is a problem, the loan officer will spring into action to make it go away. 

Do I trust a bot to do that? No. A great loan officer has an emotional bond with their clients that is an unsaid trust. Loan officers must perform, or their careers can be destroyed. Loan officers must care for their clients, or their business will not grow. A bot will save the company some cash upfront, but how much will it lose the company?  What does the bot have to risk by saying no or running the borrower through endless inadequate responses? Nothing, and I think that is something not enough people think about.  

I would urge any mortgage company considering moving in this direction to 

Look at how much you will need to spend to get clients, even to call or look you up online once you strip out the loan officer. How much marketing will you pay monthly? How much can you afford, and how much can your competitors afford? 

Examine how many clients you will lose based on the borrower’s anti-tech sentiment. There are a lot. Consider self-checkout as an example of what companies thought would save them money but ultimately led to a loss. 

Examine how many clients you will deny who should be approved because the AI does not know what questions to ask. Loans are not as simple as they seem, and borrowers can have complex financial situations with layered opportunities. How will regulators feel about Americans being deprived of the ability to buy a home because they did not ask the right questions? Can loan officers make mistakes? Yes, but a regulator would look at one loan officer, not a system-wide issue. Imagine the fines. I wonder about fraud.   How will the system handle if someone says they are buying an investment but then switches to owner-occupied once they see the rate?  They will say they hit the wrong buttons…but did they?   Once again, read up on self-checkout and theft.  

I look forward to the upcoming battle. I will be out there protecting and educating my borrowers as I have done every day for the last 17 years. I will be refining and improving my customer service. I know I am at a company that values my contribution and uses AI to help me improve the client experience. They understand that humans need humans.

As a loan officer, do not fret about the upcoming battle. 

Align yourself with a company or in a position that understands YOU are the key to improving AI, not the person to be replaced by it. Know your guides and take care of your clients. Care about your clients and their futures. Educate your clients on the risks of being house-poor and take the time to walk them through the process. Be the person they trust and can count on. You can change many lives as a loan officer. Do it, and remember that the human element can not be programmed. You got this!

Jennifer Beeston is a nationally known mortgage loan originator.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the editor responsible for this piece: [email protected].