Solano Real Estate Scene: Big difference between AI and HI
Artificial intelligence, or AI, has been around in the mortgage industry for some time now.
When Freddie Mac and Fannie Mae made running loans through their automated underwriting systems a requirement back in the late 1990s, I was initially worried it would do away with the art of packaging a loan file. I was concerned good loans would be rejected because of a lack of human intelligence, or HI, from the underwriter because a computer cannot read a legitimate letter of explanation about a gap of employment or an isolated derogatory credit problem due to circumstances beyond the borrower’s control.
As it turned out, I was wrong because prior to automated underwriting, a human being had to make the credit decision and occasionally the human underwriter was in a bad mood. I had to hope the underwriter didn’t have a huge fight with her husband that morning. I had to hope she would see the loan application risk as I saw it. I had to hope her boss hadn’t recently scolded her about being too liberal on her loan approvals.
I have always had great relationships with my underwriters, but back in the day I would often have to appeal rejections in person and turn the underwriter around to approve the loan with additional documentation, appeal letters, letters of explanations from the borrower, flower arrangements, boxes of See’s Candies and pizza parties for the underwriting manager and the staff. Human intelligence is what makes a loan officer great.
The key to getting an accurate and fast automated approval is doing a great loan application and understanding the system. A great loan officer can talk with the borrower and go deep with the borrower on short-term and long-term goals to structure the loan in a manner that achieves those goals.
In the past year alone, I have seen my team help dozens of people improve FICO scores with coaching and tips on how to move from 699 to 720, which makes a big difference on the loan rate. A great loan officer doesn’t tell someone, sorry you are rejected. A great loan officer helps the buyer or borrower with a road map to approval and success.
If the client is motivated, a great loan officer will work with the buyer no matter how long it takes – and sometimes it takes a year or two to re-establish credit or to get that promotion from apprentice to journeyman to qualify for the loan.
Creativity and compassion are human qualities.
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.