Embracing AI in Mortgage Lending: Overcoming Fear and Driving Efficiency
If you attended two of the most recent MBA conferences—the Independent Mortgage Bankers Conference and the Servicing Solutions Conference & Expo—you likely noticed a common theme: AI is here, and lenders must embrace it or risk being left behind. The sentiment of these discussions aligns perfectly with what MOZAIQ has been advocating since 2022: when it comes to AI adoption, “Don’t get left behind.”
Yet, despite widespread acknowledgment of AI’s potential, few mortgage lenders have taken the leap to implement AI-enabled solutions. Why? The answer lies partially in fear—fear of adoption, fear of change management, and fear of the cultural shift that automation demands—and just plain risk management: many lenders have already rightsized for the current market, and because of the persistent anemic growth, don’t have a lot of spare capacity to invest in new initiatives.
Change Management in Automation
The mortgage industry remains heavily reliant on manual labor and paper documents—even in 2025. While automation can significantly improve efficiency, the thought of replacing established workflows with AI-driven solutions can be intimidating for lenders. The reason? Especially in uncertain times, people don’t like change, and lenders have been processing loans the same way for decades, with little innovation, compared to other financial services verticals, like capital markets.
And because any type of AI-powered solution or automation implies change, it’s important to first communicate the “why” to teams. From a lender’s perspective, because a mortgage is a commodity product, lenders only have two levers they can play with: price, and customer service. If a process can be fully or even partially automated, freeing up processors from executing mundane, repetitive tasks, those same employees can be redeployed to higher-value work, such as enhancing customer service—for brokers, homeowners, investors—and participating in functions like file prep, pre-underwriting, and several aspects of post-closing (e.g., funding) that still require intelligent human intervention. Not to mention that automation will lower the total cost of processing a loan, giving the lender wins with both the price and service levers.
Market Conditions: A Barrier or an Opportunity?
Some lenders are also hesitating to invest in AI-powered automation (and other technology initiatives) due to unfavorable market conditions and the pervasive uncertainty brought on by the new administration in Washington. And at first glance, who can argue with them?
- Homebuyer affordability declined in January 2025 due to volatile mortgage rates and high home prices continuing to impact many prospective buyers’ purchasing power (Source: MBA, Research Institute for Housing America).
- Even though 30-year fixed mortgage rates for conforming loans decreased to their lowest levels (down to 6.88%) since mid-December 2024 (Source: CNBC), mortgage applications still decreased 1.2% from one week earlier for the week ending Feb. 21, 2025. (Source: MBA).
- New home inventory reached its highest level since 2008 (Source: Federal Reserve Bank), leading to a surge in available homes while rates remain high, meaning demand is not catching up.
Even with these market conditions, lenders must ask themselves: If the landscape isn’t improving, why not take steps now to increase operational efficiency and prepare for the future?
The Smart Lenders Are Already Acting
We’re working with a client that has deployed several integrated AI automation solutions, such as Initial Underwriting Submission and Appraisal Review, where configuration costs are minimal, and they only pay on a per-transaction basis.
This approach allows them to “test the waters” of automation, optimize their processes to balance automation with human oversight, and position themselves for the inevitable scale they’ll need once the market improves. Essentially, they are willing to invest in solutions that allow them to minimize the risk of having to suddenly scale and grow with people, and are willing to pay for that technology now e.g., invest in a solution that only charges for funded loans, on a per loan basis—transactional and funded volume only, thereby using technology as a hedge against the market risk/uncertainty.
And why not do it when volumes are low—when there’s less stress and more opportunity to refine and implement AI solutions correctly the first time?
The Data Doesn’t Lie
When automation increases throughput from 8 files per day to 16 for a critical underwriting process such as appraisal review, achieving a 100% gain in process efficiency, why wouldn’t lenders seize the opportunity?
When an Initial Underwriting Decision timeline is reduced from 48 hours to just 4 hours—making Loan Officers, Loan Processors, and Loan Underwriters significantly more efficient—isn’t it worth taking the time to explore AI’s potential now?
Reduced processing costs per loan and improved operational efficiency should be compelling enough. The question remains: Why wait?
The Time to Act is Now
Culture change remains the biggest barrier to AI adoption in mortgage lending. However, waiting for the market to improve before implementing efficiency-driven technology is a risky strategy. AI isn’t here to displace professionals—it’s here to empower them.
Mortgage lenders who embrace AI today will not only navigate the current downturn more effectively but will also be better positioned for growth when the market rebounds. The question isn’t whether AI should be adopted—it’s whether lenders can afford to wait any longer.
If you’re interested in realizing real business benefits via a winning automation strategy, contact MOZAIQ today and find out how our Integrated-AI, End-to-End, Intelligent Mortgage Automation solutions can help you win.
