May 2024

Examining the Future of AI in Mortgage

This month, we are sharing different perspectives on the hottest new acronym in our industry, and for that matter, in the world: AI. Executives from our NTC business solution share their points of view on AI and servicing. Meanwhile, Kara Snow, our resident compliance expert on AI, suggests that if our industry wants to see what’s coming next in AI regulations, it should look to Europe. Other topics covered in this issue include the prospect of new federal legislation to address the coming appraiser shortage and the forces driving the return of non-agency securitization.

Pete Pannes
Chief Business Officer

Appraisal Industry Update from Capitol Hill

Mark Cassidy, Chief Valuation Officer of our Service 1st Solution, recently spent time on Capitol Hill with senior congressional staffers as part of a delegation from the Real Estate Valuation Advocacy Association (REVAA). The group discussed the challenges our industry is facing as a result of the aging appraiser workforce and the need for greater diversity and inclusion to counter concerns about bias in the valuation process.

The centerpiece of the discussion was the Appraisal Industry Improvement Act, a bill that has already been approved by the House and is currently in the Senate for approval.

The bill would improve the appraisal process by:


  • Allowing licensed residential appraisers to conduct appraisals on both conventional and FHA properties. Currently, only certified appraisers can conduct appraisals on FHA properties, and licensed appraisers are limited to conventional properties. Allowing licensed appraisers to conduct appraisals on both types of properties would immediately expand the field of available appraisers by 10%.

  • Adding state credentialed trainee appraisers to the national Appraiser Registry, allowing appraisers to work as soon as they’re licensed rather than waiting until they are fully certified. 

  • Adjusting the required education and training to address the growing appraiser shortage. 

  • Decreasing the annual appraiser registry fees.

The bipartisan bill—introduced by Senators Jon Tester (D-Mont.) and Kevin Cramer (R- N.D.)—has gotten a favorable reception on both sides of the aisle and now awaits full Senate approval.

How Will AI Change Our Industry?

In an industry known for its acronyms, probably no acronym gets bantered around more these days than AI. Will it, as advocates predict, revolutionize the way we finance and support homeownership? Or is our industry years away from the practical adoption of AI, as some skeptics say? In this month’s issue of Coffee Talk, Jimmy Walby and Danny Byrnes share their views on AI and how NTC may deploy this game-changing technology in the future.

The Regulatory Implications of AI for Lenders

AI is the new, new thing for the mortgage industry and, for that matter, the world in general. But while lenders and developers are trying to find new applications for AI, regulators are taking a more jaundiced view of this new technology and trying to rein in AI usage with compliance guardrails. To get a sense of the state of play at the moment, MortgageOrb interviewed Kara Snow, Senior Regulatory Counsel, who is tracing current regulations and is seeing signs of where this could possibly go next. 

Unlike the Mortgage Market in General, the Alternative Lending Sector is Having a Very Good Year

In the latest Clayton blog, Pete Pannes takes a closer look at the alternative lending market and what the driving forces are behind the uptick in demand for closed-end seconds, HELOCs, non-QM and prime jumbo loans. 

The Case for Flood Insurance Testing & Audit Preparation

Flood insurance compliance is a growing area of interest for regulators. Clayton Servicing Oversight helps banks, MSR owners and servicers measure their performance, validate regulatory and investor compliance and identify loan and portfolio-level risk. Whether it’s preparing for an audit or establishing ongoing flood insurance testing, Clayton ensures the best execution of regulatory and investor guidelines to mitigate losses. Check out our latest case study and learn how the Clayton team can help find and remediate potential problems before internal or regulatory audits do.  

Launch of Innovative IRS 8821 Income Verification Solution

Covius announced yesterday that it has entered into an agreement with Halcyon, a leader in income verification services, to offer clients an advanced IRS 8821 income verification tool that significantly enhances efficiency and accuracy in income verification while reducing costs and turn times.

Compared with the current 4506 verification solution, the new tool reduces turn times from several days or longer to as fast as 24 hours. It is significantly less expensive than tax transcripts and produces virtually no rejections.

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