DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.
Issue link: http://digital.dsnews.com/i/1470604
59 poor data fed into them), I will point out there are already best practices in place to ensure proper treatment of protected classes, many summarized in a May 2019 article by Brookings ("Algorithmic bias detection and mitigation: Best practices and policies to reduce consumer harms"), which I believe most lenders are already employing. Where Director Chopra and I really differ is his belief that the algorithms can never "be free of bias" and may result in credit determinations that are unfair to consumers. e real question is: compared to what? THE UNBOTTLED GENIE Technology is, by its design, agnostic and less prone to predisposition and profiling than the minds of human beings. Lenders are already forced to navigate the potential risk of bias—or even the perception of same—and to be able to prove that lack of bias at any given time. As a technologist, I disagree with the blanket bias premise. I believe the use of algorithms, rather, is pro-competitive and expansive of credit on the whole, especially for qualified, under-banked groups that have neither a credit score nor the required documentation necessary to obtain credit to buy a new home. Worldwide, AI in banking is currently a ~$4 billion market and is expected to grow to ~$64 billion by 2030. At this point, I believe AI in the industry is here to stay. Mohammed Rashid, Head of Fintech for Tavant, put it this way: "Tavant, as a solution provider for many of the nation's top home lenders, sees AI as a very important technology that can aid the cost and time of loan origination, remove the inherent bias and errors of human interaction in loan qualification, and remove many of the obstacles facing the potential home buyer from getting their dream home. Today, most of our lenders are currently using, have implemented, or have plans to implement AI." ere are many great uses of AI in our housing finance market outside of the underwriting and credit decisions. A few examples include automation of loan processes and best execution of operations that removes time and cost of a loan application; automation of customer services and loan servicing functions, including default management and loss mitigation; disparate impact analysis and reporting; detection of fraud; and enhancements to privacy and enterprise security. ere are many more opportunities and applications of AI that, again, do not influence the credit decision, or the price of the home. Ultimately, however, the use of AI has the potential to bring a huge positive impact to the mortgage industry, which would benefit both consumers and lenders alike. It also has the potential to create more equity in homeownership for those who are underbanked. While home lenders will need to be very discerning as they implement artificial intelligence (especially in decisioning), it is important that they seek opportunities to partner with consumer advocates. I strongly believe all stakeholders in lending embrace equity in homeownership and the pursuit of sustainable housing for everyone. Going way back to my college days, where I achieved an advanced degree in astrophysics, I have been an ardent admirer of Stephen Hawking, who long ago opined on the topic of AI: "e genie is out of the bottle. We need to move forward on artificial intelligence development, but we also need to be mindful of its very real dangers. I fear that AI may replace humans altogether. If people design computer viruses, someone will design AI that replicates itself. is will be a new form of life that will outperform humans." Dain Ehring is a Senior Advisor with Gate House Strategies and head of Gate House Digital, an advisory firm leading solutions in housing technology modernization. With over 30 years of executive- level leadership, primarily in fintech, he founded Dorado, a leading SaaS company in consumer finance and a residential lending network, served as an executive at CoreLogic, Sun Microsystems, and Lighthouse Design. "Worldwide, AI in banking is currently a– 4 billion market and is expected to grow to– 64 billion by 2030. At this point, I believe AI in the industry is here to stay." —Dain Ehring, Senior Advisor, Gate House Strategies and Head of Gate House Digital