Managing Artificial Intelligence And Machine Learning In The Mortgage Industry

Mortgage News March 20, 2023

Black Knight, a leading provider of integrated software, data, and analytics solutions, has released a White Paper titled “Management of AI and Machine Learning in the Residential Mortgage Industry” to address the challenges of incorporating artificial intelligence (AI) and machine learning (ML) solutions in the mortgage industry.

The White Paper acknowledges that the application of AI and ML requires new management disciplines, as these technologies operate differently from traditional software solutions. The aim of the paper is to help industry managers and executives safely benefit from the advances in AI/ML.

With AI, things are happening behind the scenes, with decisions being made and events triggering like magic. However, in a highly regulated industry such as the mortgage industry, important lending decisions cannot be trusted to magic. The paper highlights the justifiable concerns of regulators, particularly in matters of fair lending, that consumers are not harmed by bias in the application of AI/ML in the lending process. Therefore, model explainability and transparency are critical to ensure that lending decisions are fair and unbiased.

The White Paper discusses the many challenges and industry-specific concerns that must be considered when integrating AI/ML into the mortgage process. It emphasizes that AI/ML technology is appropriate for addressing business problems that do not yield to deterministic approaches, where inputs are varied or a range of possible outcomes exists, and therefore, a probabilistic approach is required. For most mortgage origination requirements, traditional business rule management software remains the appropriate technology since inputs must be directly traceable to precise expected outputs, also known as a deterministic solution.

The White Paper by Black Knight provides valuable insights for managers and executives seeking to incorporate AI/ML solutions into the mortgage industry. It offers a comprehensive guide to the best practices and considerations that must be made when implementing these technologies to ensure fair and unbiased lending decisions. In a world where technology is advancing at an unprecedented rate, it is essential to have a clear understanding of how AI and ML can be used to improve processes while maintaining transparency and fairness.

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