27
July 2025
July 2025 ยป
themortgagepoint.com
T H E E X C H A N G E
Q:
What are the pros/cons
to the use of AI (artificial
intelligence) in the mortgage
servicing space?
Schmidt: Communication is key in any
borrower/servicer relationship. If AI can
help servicers communicate clearly and
consistently across their whole portfolio,
it will go a long way toward resolving
complaints and increasing consumer
satisfaction. Servicers, however, need
to properly and cautiously review the
accuracy of AI outputs. While AI can be
an extremely beneficial tool, one small
glitch in the programming or a subtle
change in regulations could lead to
widespread misinformation.
Q:
What trends do you see in
the servicing marketplace
currently?
Schmidt: The shift to streamlined loss
mitigation options certainly has its place
and fits into the proverbial 80/20 rule,
meaning 80% of borrowers will benefit
from the simplicity of the process and
reduced payments. Most agencies target
a 20% to 25% reduction in the principal
and interest portion of the monthly
payment, either through a loan mod-
ification or combination of principal
deferment and modification, all without
the borrower submitting documen-
tation. However, some borrowers will
need more assistance.
For example, for cases where a
co-borrower dies, or there's a divorce,
or a borrower transitions from em-
ployment to disability or retirement,
there's no opportunity to present these
additional needs through streamlined
loss mitigation options. Furthermore,
many borrowers may think they need a
lower payment, when in fact, they need
to control their spending. I believe one
of the unintended consequences of the
new streamlined approach could be its
misuse as a form of home equity financ-
ing by borrowers.
