DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.
Issue link: http://digital.dsnews.com/i/1491912
50 create basic AI, it will be challenging to compete with chip manufacturers and big tech on building the sophisticated models that will significantly enhance (presumably) life as we know it. I would not recommend they invest to do so; I think it would be an expensive endeavor that would be outdated the moment it went into production. Instead, an AI collaborative should be created for each industry (finance, medicine, law, engineering, etc.) so that expert engineers would have access to industry experts at large, not an individual company with its own biases and goals. THE NEW FRONTIER Currently, AI is wildly expensive, complicat- ed, and being discovered in a "Wild West"-like theater. Our world's greatest minds are speaking with AI and facilitating the development into base models for future use. Once the base models are built, businesses will only need to input 15 or 20 fundamental principles into the AI model to provide reliable outputs. Companies may already be working toward those fundamental principles. However, these will most likely be aggregated and consolidated by the industry to identify the best principles to use. is approach will establish the use of AI best practices to an industry, which will impact a number of important KPIs. Here are some examples I thought of in about five minutes of how AI could enhance our servic- ing industry (imagine an entire team over months): • Internal Compliance and Audit: What is our confidence internally for full compliance with 2016 Mortgage Servicing Rules? What steps are recommended to obtain compliance? • Operations: What would you recommend we have the team focus on for the next hour to maximize productivity? What are some habits of the team that are inefficient and contribute to waste? • Cybersecurity Protection: What is a loophole in our security system and what is the solution to addressing this? • On-Demand Training: What is the proper way to complete Task 24 in the training manu- al, and what am I doing wrong? • Legal: What is the most common issue we see with New York foreclosures during the legal process after service is perfected? What is the most successful response to that issue? I was speaking with a few other leaders in the mortgage industry, specifically around AI and machine learning, and I noticed a commonality: this is an area all are thinking about right now. Mike Merritt, SVP of Customer Care and Mort- gage Default Servicing at BOK Financial, in a discussion on this topic pointed out how quickly these technologies are gaining ground in society, with apps like Alexa and Siri becoming more functional every day. Merritt went on to say that "[t]he mortgage industry could be ripe for a technology revolution over the next decade" and went on to provide a roadmap to several significant enhancements through the implementation of AI and Machine Learning: "[AI] could improve how we communicate with our customers by allowing the industry to offer more self-service options, better chatbot options to help more customers, give agents more information to handle calls, and allow agents to spend more time with customers on the compli- cated matters where their expertise can make the biggest difference … these technologies could help better manage the documents that the industry runs on in both originations and servicing … identify, index, and gather key data points from documents to help mortgage lenders be more efficient with their staff. Finally, these technologies could help meet compli- ance needs. Voice analytics can help monitor every call interaction, not just a small sample. OCR with machine learning and AI can review data points, documents, letters, and notes against compliance standards to increase the scope of review across the full servicing and origination organization." I could not agree more, and these benefits are groundbreaking operational improvements for employees and consumers. We are probably a little less than 10 years out from this being very real to us all. e model could be an application on your phone, or on a desktop, and responses provided real-time and recorded for auditing purposes just like an email. EXERCISING CAUTION e benefits of AI are apparent: the efficiency and speed; error reduction; accurate storytelling capability; cost reduction. While the shortage of AI and machine learning scientists will slow the production of the latest and greatest model, we have a more pressing concern. ere is a lack of safety and regulation as AI is developed, national- ly and internationally. To wit, having the potential for a higher intelligence than humans is a very real possibility, and an open discussion needs to come to the front at every level. e discovery of nuclear fusion and the atom bomb significantly changed human interaction; it took a Cold War and the agreed mutual destruc- tion of the human race to be the stop-gap that balances nuclear technology with our flourish- ing. AI's entire purpose is to make human-like decisions. Depending on the sophistication of the model, it will take on a mind of itself and make autonomous decisions. Whether these decisions are aligned with human flourishing is yet to be proven. I believe the reader agrees when I say, that is a very big question to ask and answer prior to releasing to the general public. I will leave you with this real, AI-generated quote based on the persona of Elon Musk: "I'm increasingly inclined to think that there should be some regulatory oversight, maybe at the national and international level, just to make sure that we don't do something very foolish. I mean, with artificial intelligence, we're summon- ing the demon." And you can take that to the bank. Daniel C. Chilton is a Partner at Robertson, Anschutz, Schneid, Crane & Partners, PLLC. Chilton is an experienced financial services attorney who has served on numerous financial services panels because of his extensive experience and expertise in the areas of replevin, bankruptcy, mortgage servicing, financial regulatory compliance, and debt collections. Before joining RAS, he was with Citibank from 2002-2016 and held positions in Operations, Finance. and Legal. He has more than 12 years' experience in counseling banks through six consumer finance regulatory exams from the CFPB, FDIC, and OCC. Legal Industry Update By: Daniel C. Chilton