How New is AI in the Mortgage Industry, Really?

June 1, 2020

How New is AI in the Mortgage Industry, Really?

 Artificial intelligence, or AI, has never been more popular in the mortgage industry than it is today. Ten years ago, hardly anyone was talking about it. Today there are countless articles, webinars and reports about how AI will “revolutionize” the mortgage process.

Which we find a little odd, since AI is not new at all—not even to the mortgage industry. But then, what passes for AI these days is not often what it’s cracked up to be.

AI is More Than Templates

Over the past several years, countless mortgage software providers and even a growing number of mortgage lenders and servicers have been boasting about how they are using AI to reduce or eliminate manual work, particularly when it comes to processing and auditing loan files. In reality, however, AI has been used for loan document processing and data extraction for more than 30 years. How do we know? Because that’s how long we’ve been doing it.

Yet these days, almost every document processing software provider claims its products use AI. The reality is that most of our competitors’ products do not really use “intelligence” to classify documents. Instead, they identify loan documents by comparing it to documents with the same template. This is great if you’re using commonly used documents, such as 1003 and 4506-T forms. The problem is there are many variances in the types of loan documents most lenders and servicers come across.

As a result, most document processing software is unable to classify a document that is unfamiliar or has an unstructured layout. Without a template, it has no way to identify it, let alone extract meaningful data from it. For this reason, most of these products aren’t really “intelligent.” They can only make decisions based on the documents they already know.

How Real AI Goes Deeper

Like other providers, Paradatec is capable of identifying common loan documents based on templates. But unlike other providers, our technology can identify virtually any document, whether it has seen the document before or not.

That’s because we combined our proprietary optical character recognition (OCR) technology with natural language processing technology, which uses AI-based algorithms to “read” entire documents. By doing so, it can also find and extract data on virtually any document, even if the document layout varies significantly from other documents of the same type.

This is particularly useful for unique documents, like deeds, liens, notes and addendums. Take warranty deeds, for instance. There are many different variations of what a warranty deed looks like. However, almost every warranty deed contains the same information. By looking at the OCR output, our technology can tell it’s a warranty deed because it has learned what sort of information warranty deeds contained.

Not Just Better—Faster, Too

By the way, you might think that a technology that reads entire pages of documents at a time would be much slower than software that relies on templates. But that’s not the case. Our technology can process roughly 3,600 pages per hour, which is at last five times faster than any other product on the market today. In fact, a top three sub-servicer used our technology to ingest 25,000 loans in four days—while simultaneously fully re-indexing and restacking every loan, extracting key data elements and comparing that data to the prior servicer’s database.

That’s the true power of AI. So, the next time you hear someone talk about AI, you’ll know whether they’re truly intelligent about the subject—or maybe being a little artificial.

If you’d like to learn more about how Paradatec can transform how you manage loan documents, drop us a note at contact@paradatec.com. We are happy to tell you more.

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Our Clients Love Us

From originators to servicers, BPOs and external due diligence firms trust Paradatec to streamline document processing.

We asked a number of vendors, including the Paradatec team, to help us perform an extensive due diligence process that included an out-of-the-box, blind test with our own loan samples and proof of concept test.  Paradatec was the clear winner based on our comprehensive vetting process.

Steven Davids
Senior Vice President of Correspondent Lending, Northpointe Bank