We’re not necessarily looking to break technology news, but we are looking to put it all into greater context for you. Right now we’re hearing:

Home Appreciation Is Leveling

According to the latest VeroFORECAST report from Veros Real Estate Solutions (Veros), Q2 2019 data shows the average projected appreciation rate for residential real estate in the nation’s 100 largest markets will be +3.7 percent over the 12 months ending June 1, 2020. This maintains the rate predicted in the first quarter 2019 forecast and signifies a leveling out after a four-quarter decline from a projected appreciation rate of +4.5 percent a year ago.  


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Veros, an award-winning industry leader in enterprise risk management, collateral valuation services, and predictive analytics, provides these quarterly VeroFORECAST reports to clients by subscription and to industry media in a summary overview. The current report is based on data from 343 Metropolitan Statistical Areas (MSAs) that include 13,719 zip codes, 987 counties, and represent 82 percent of U.S. residents. 

“This flattening indicates that although there is definite softness overall in the housing market the fundamentals are healthy,” explained Eric Fox, Veros VP of Statistical and Economic Modeling and the report’s author. “One potential contributing factor we saw in the models is some softening of mortgage interest rates, which is helping to prop up values and stem the decline.” 


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Another characteristic holding steady is that five percent of markets are projected to depreciate over the upcoming year, a figure that has remained the same since fourth quarter 2018, after it jumped from three percent in a single quarter. 

The overview that Veros provides to the media includes Top Ten and Bottom Ten market lists, and for second quarter 2019, both these rankings are dominated by small-to-modest-sized MSAs. Housing supply is a key discriminator between the markets in this forecast’s top and bottom rankings. A very low housing supply is a feature of the markets where prices are expected to increase significantly. Population trends are another consistent characteristic, with slow or declining population growth contributing to low demand in markets at the lowest ranks of the forecast. 


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Average forecast appreciation for the Top Ten is expected to be about +8.3 percent, up slightly from +7.9 percent a quarter ago. The Northwest continues to dominate the highest appreciating markets, with Idaho and Washington State each holding four of the Top Ten spots. The remaining two Top Ten MSAs are the oil-market Texas metros of Odessa, top-ranked with forecast appreciation of +9.7 percent, and Midland, ranked fifth with +8.0 percent.  

The Midwest states of Indiana, Michigan, and Ohio are another area showing strength, with average statewide appreciation for all three expected to be around +5.0 percent. Arizona, too, is forecast to do uniformly well, with Metro Phoenix, which dropped out of last quarter’s Top Ten, expected to top +7.0 percent and Tucson starting to show signs of strength along with the smaller markets of Prescott and Sierra Vista, all projected to exceed +6.0 percent.   


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Despite having two of the forecast’s top-ranked MSAs, Texas is predicted to experience continuing softening. The major markets of Dallas-Fort Worth-Arlington and Houston-Sugar Land-Baytown are forecast to see residential real estate appreciate between just +2.0 and +3.0 percent. 

Louisiana is forecast to do uniformly poorly, with four of its MSAs among the Bottom Ten markets. Connecticut and Arkansas each contribute two markets to the Bottom Ten, with the remaining two Bottom Ten markets located in North Dakota and Illinois. Even so, the most severe depreciation the report predicts is -1.9 percent for the Grand Forks, ND-MN MSA. 

The same market strength that is buoying residential real estate values in the Northwest does not extend down the West Coast. Prices for property in California are expected to remain relatively soft. All major markets in the Golden State, including Los Angeles, the Bay Area, and San Diego, are expected to appreciate between +2.5 and +4.5 percent, in stark contrast to predicted appreciation rates of the recent past, which were often in double digits. 

The nation’s largest market, the New York-Northern New Jersey-Long Island MSA, is expected to remain very soft through May 2020. What is driving metro real estate values lower, according to the forecast data, are large areas within the New York City boroughs as well as several markets in northern New Jersey. The borough of Manhattan, for instance, continues to be forecast with depreciation of -2.5 percent. Across New Jersey the average appreciation is only +1.7 percent. 

NAMB Marketplace Adds Ability To Directly Connect Brokers With Wholesale Lenders

Lender Price, a provider of digital mortgage technology solutions, and the National Association of Mortgage Brokers (NAMB) announced today the release of “Send to Lender,” a new feature added to the NAMB Marketplace digital origination tool that provides direct communication between mortgage brokers and wholesale lenders. 


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NAMB Marketplace is an online tool developed by Lender Price that is offered to NAMB members free of charge. It features a pricing engine that allows mortgage brokers to search for loan products and compare pricing between multiple wholesale lenders that participate in the NAMB Marketplace. It also includes the ability to instantly send a digital loan application to borrowers directly from the pricing results, providing mortgage brokers with an advanced point of sale tool that was originally designed for large banks and mortgage lenders.


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The new “Send to Lender” feature adds the option for brokers to send a loan scenario to a lender directly from the pricing results. Mortgage lenders instantly receive a notification that includes the loan scenario, the selected product and price and the broker’s contact information.
“Our goal is to connect mortgage brokers with borrowers and wholesale lenders in an interactive way,” said Dawar Alimi, founder and CEO of Lender Price. “With ‘Send to Lender’ we allow brokers to engage with lenders in an incredibly direct and convenient way. With only three mouse clicks, brokers can send a complete loan scenario inquiry to any lender in the marketplace.”


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Additionally, NAMB and Lender Price released a new website that contains information about NAMB Marketplace, demonstration videos and a fully automated registration process that creates an account for brokers in minutes. The new website can be found at www.nambmarketplace.com


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“We’re very proud to offer NAMB Marketplace to our members at no cost,” said Rick Bettencourt, president of NAMB. “This is the type of technology that mortgage brokers need because it truly simplifies the origination process. One tool connects brokers directly to borrowers and lenders for the sole purpose of obtaining a mortgage loan. We’re grateful to have Lender Price work with us on this amazing solution.”

Defects Related To Loan Package Documentation Doubled From 2017 To 2018

ACES Risk Management (ARMCO), a provider of enterprise financial risk management solutions, announced the release of the quarterly ARMCO Mortgage QC Trends Report. The latest report covers both the fourth quarter (Q4) and the calendar year (CY) 2018, and provides loan quality findings for mortgages reviewed by ACES Audit Technology™.


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“Critical defects in 2018 reflect the market’s rising interest rates and continued escalation of property values,” said Nick Volpe, chief strategy officer for ARMCO. “Fewer highly qualified borrowers transact mortgages when rates increase, which fills the market with more marginal borrowers who tend to require more documentation. It makes sense that defects related to loan package documentation more than doubled from 2017 to 2018.”


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The report’s noteworthy findings include:

>>In Q4 2018, the critical defect rate increased just over 2%, reaching 1.93% fromthe previous quarters rate of1.89%

>>InCY2018,thecriticaldefectrateincreasedalmost8%overthepreviousyear,jumping from 1.68% in CY 2017 to 1.81% in CY2018


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>>Defects related to Income and Employment are on therise: In Q4 2018, Income and Employment related defects increased 63% overQ3 2018; also in Q4 2018, Income and Employment related defects comprised agreater percentage of total defects for both CY 2018 and CY 2017

>>Defects attributed to Loan Package Documentation more than doubled betweenCY 2017 and CY2018.

>>InQ42018,defectsattributedtocategoriesrelatedtoUnderwriting/Eligibilitycontinued to dominate overall quality issues, comprising over 65% of all criticaldefects.


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>>In Q4 2018, the top three categories that increased over Q3 2018 were all key qualification categories: Income and Employment, representing 20.39% of all critical defects in the benchmark. This category was followed by Credit at18.45% and Loan Package Documentation at 15.53%.

>> In CY 2018, FHA loans accounted for roughly 31% of the loans reviewedbut represented approximately 41% of loans containing criticaldefects.

The Q4/CY 2018 ARMCO Mortgage QC Industry Trends Report is based on nationwide post- closing quality control loan data from over 90,000 unique loans selected for random full-file reviews, as was captured by the company’s ACES Analytics benchmarking software. Defects listed in the report are categorized using the Fannie Mae loan defect taxonomy.

“As the market fluctuates, so do the distribution and frequency of defects, and if lenders aren’t prepared, that can end up costing them a lot in price adjustments, fees, investor delays and even buybacks,” said Phil McCall, president of ARMCO. “Analytical QC technologies enable lenders to catch the defects and proactively prevent them so they can protect their profits. In shifting markets, where defects are like moving targets, that’s more important than ever.”

Optimal Blue Launches Support For Non-QM Loans

The latest release from Optimal Blue augments and expands their support for Non-QM and Expanded Guidelines products. Earlier this year, the company decided to make a substantial investment to further enhance support for these unique mortgage loan products after observing significant growth in this area. Currently, Optimal Blue’s Expanded Guidelines monthly lock volume exceeds $1 billion, a threshold 2.5 times the volume experienced just 18 months earlier.


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Significantly benefiting investor and lender clients alike, these powerful and innovative capabilities allow investor clients to further expand their suite of product offerings, improve accuracy, and gain new clients. Additionally, lenders can streamline inefficient workflows, enhance their competitive reach with new borrowers, and easily access the Non-QM and Expanded Guidelines product offerings for more than 60 leading investors. 


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“Sprout Mortgage congratulates Optimal Blue on the release of its new Non-QM product selection capabilities and thanks them for creating this industry leading technology,” said Mike Strauss, President of Sprout Mortgage. “While only requiring minimal user inputs and established data feeds from leading loan origination systems to automatically pre-populate additional values, Sprout has found Optimal Blue’s Non-QM filters to fully support its product line with complete accuracy.”


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Users of the Optimal Blue platform can quickly and easily identify the most accurate, “best fit” financing alternative for each and every consumer they serve. Immediately available to clients at no additional cost, a brand-new Expanded Guidelines section will be added to all applicable search, profile, and lock forms within the platform in order to fully support the unique specifications of Expanded Guidelines products. Close to 20 granular filters will be embedded into those forms for income verification, payment history, debt consolidation, bankruptcy, and more. In addition, Optimal Blue now evaluates specific housing events, financial outcomes, and other user-defined selections to further refine pricing precision and overall product searchability. 


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 “This is a tremendous step forward for the Non-QM marketplace and takes the uncertainty out of choosing the Non-QM loan that best fits borrowers’ needs,” Strauss continued. “As a result of the new Non-QM filters, loan officers can put away their makeshift scratch pad notes and instead, leverage the power of Optimal Blue’s engine to discover those eligible Non-QM products that provide borrowers with their lowest cost financing choices.”

“We are proud to offer enhanced Expanded Guidelines support to our clients,” explained Tiffany McGarry, Director of Client Services at Optimal Blue. “These market-leading capabilities further exemplify our continued focus on delivering unique secondary marketing solutions that help our clients differentiate and grow.”

June New Home Purchase Mortgage Applications Increased 17.9% Year Over Year

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for June 2019 shows mortgage applications for new home purchases increased 17.9 percent compared from a year ago. Compared to May 2019, applications decreased by 14 percent. This change does not include any adjustment for typical seasonal patterns.


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“Ongoing concerns about economic growth and trade policy likely kept some potential buyers out of the market despite lower mortgage rates,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Our seasonally adjusted estimate of new home sales was down in June after two of the strongest months in the survey’s history dating back to 2013, but remained higher than a year ago. The average loan amount for new home purchase applications fell slightly to its lowest level since November 2018, as home price growth continued to slow in many markets and purchase transactions have shifted away from the higher end of the price spectrum.”


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MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 646,000 units in June 2019, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.


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The seasonally adjusted estimate for June is a decrease of 11.1 percent from the May pace of 727,000 units. On an unadjusted basis, MBA estimates that there were 58,000 new home sales in June 2019, a decrease of 15.9 percent from 69,000 new home sales in May.


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By product type, conventional loans composed 68.7 percent of loan applications, FHA loans composed 18.0 percent, RHS/USDA loans composed 0.6 percent and VA loans composed 12.7 percent. The average loan size of new homes decreased from $330,311 in May to $329,593 in June.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. This data also provides information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.

Integration Enables Lenders To Accurately Quote Closing Costs

LodeStar Software Solutions, a provider of mortgage fee data, announced that its Loan Estimate Calculator is now available through Lending QB, a provider of SaaS loan origination technology solutions. The seamless integration allows lenders to access LodeStar’s products directly through LendingQB to drive quality and efficiency in the loan origination process. 


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“LodeStar is thrilled to partner with a fast-growing company like LendingQB,” said Jim Paolino, CEO and Founder of LodeStar. “Our secure, seamless integration helps our clients save both time and money, so lenders of all sizes can process mortgage loans and grow their businesses faster.”


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Users can instantly and securely generate a quote from LodeStar’s Loan Estimate calculator without duplicating any data entry or leaving LendingQB. All quotes are guaranteed for accuracy and instantly returned in the proper TRID format. Fee quotes include transfer taxes, real estate taxes, municipal recording charges, title insurance premiums and settlement costs across all 50 states. Clients can set up their settlement service providers’ fees in the system.


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 “Our integration with LodeStar represents our continued commitment to streamlining the LE and disclosure form generation process for our clients,” said Tim Nguyen, CEO of MeridianLink. “Continuing to collaborate with industry leaders, like LodeStar, allows us to provide our clients with access to the most accurate rates and fees enabling them to close fully compliant loans.”


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LodeStar Software Solutions is a Philadelphia based company specializing in web-based compliance tools for the mortgage and title insurance industries.  LodeStar’s Loan Estimate Calculator provides guaranteed closing cost estimates for all 50 states including title insurance premiums, transfer taxes, municipal recording charges and settlement services fees. Lenders can manage all their providers’ fees from a single platform across their entire network. 

Study Shows That AI Tool Gives Lenders Big ROI

An independent analysis of the real-world impact of Black Knight’s artificial intelligence (AI) solution, AIVA was conducted. Using actual findings from the operations of a top 50 lender in Q4 2018, MarketWise Advisors, LLC – a management consulting firm focused on technology in the financial services industry – found that using AIVA can significantly drive down the cost of mortgage originations. The study identified a savings of up to $437 per originated loan, with the cost impact continuing to grow significantly as AIVA’s machine learning and unique pattern recognition capabilities mature to include more skills.


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“Through the independent analysis of an unbiased third party, we have been able to show that lenders can expect to see significant savings by incorporating AIVA into their origination process,” said Anthony Jabbour, Chief Executive Officer of Black Knight.


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“Leveraging AIVA results in significant cost savings, provides the ability to redirect tens of thousands of man hours to items more focused on satisfying customers and produces a return on investment nearing 500%.”


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MarketWise’s approach included reviewing existing processes, as well as a time-and-motion study and on-site lender employee interviews to evaluate the time and cost reductions associated with leveraging AIVA in key areas of the origination process. MarketWise also evaluated AIVA’s income, asset, insurance and file intake review skills and found that the associated process improvements decreased the cost of origination by up to $437 per loan, with an average annual projected financial impact of $3.13M for the top 50 lender in the study, but results will vary for each lender.


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In addition to the direct cost savings, the study found that AIVA also produces significant indirect impacts, including reduced error rates and increased loan quality, consistency and compliance. The projected average annual return on investment was 483% for this lender, meaning that for every dollar invested in the technology, the expected financial impact is a return of $4.83, a figure that will exponentially increase as AIVA’s skills evolve to incorporate more complex tasks.

“At Black Knight, we remain focused on bringing innovative solutions to market that help our clients increase revenue, efficiency and compliance,” said Jabbour. “AIVA checks all of these boxes. AI and machine learning represent a transformational shift for the mortgage industry, and Black Knight is proud to be leading the charge.”

Mortgage Credit Availability Increased In June

Mortgage credit availability increased in June according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) that analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool.


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The MCAI rose 0.2 percent to 189.8 in June. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conventional MCAI increased 0.3 percent, while the Government MCAI decreased slightly (0.1 percent). Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 0.6 percent, and the Conforming MCAI fell by 0.1 percent.


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“Overall credit availability increased only slightly in June over May’s levels. Jumbo credit availability increased for the sixth month in a row and is at its highest level since 2011, when the survey began,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Credit availability has generally increased in 2019 as lenders have worked to meet affordability challenges.  Because mortgage rates have recently fallen and home price growth has decelerated in many markets, credit availability may stabilize at its current levels.” 

CONVENTIONAL, GOVERNMENT, CONFORMING, AND JUMBO MCAI COMPONENT INDICES

The MCAI rose 0.2 percent to 189.8 in June. The Conventional MCAI increased 0.3 percent, while the Government MCAI decreased slightly (0.1 percent). Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 0.6 percent, and the Conforming MCAI fell by 0.1 percent. 


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The Conventional, Government, Conforming, and Jumbo MCAIs are constructed using the same methodology as the Total MCAI and are designed to show relative credit risk/availability for their respective index. The primary difference between the total MCAI and the Component Indices are the population of loan programs which they examine. The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines non-government loan programs. The Jumbo and Conforming MCAIs are a subset of the conventional MCAI and do not include FHA, VA, or USDA loan offerings. The Jumbo MCAI examines conventional programs outside conforming loan limits, while the Conforming MCAI examines conventional loan programs that fall under conforming loan limits.


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The Conforming and Jumbo indices have the same “base levels” as the Total MCAI (March 2012=100), while the Conventional and Government indices have adjusted “base levels” in March 2012. MBA calibrated the Conventional and Government indices to better represent where each index might fall in March 2012 (the “base period”) relative to the Total=100 benchmark.

EXPANDED HISTORICAL SERIES

The Total MCAI has an expanded historical series that gives perspective on credit availability going back approximately 10-years (expanded historical series does not include Conventional, Government, Conforming, or Jumbo MCAI). The expanded historical series covers 2004 through 2010, and was created to provide historical context to the current series by showing how credit availability has changed over the last 10 years – including the housing crisis and ensuing recession. Data prior to March 31, 2011, was generated using less frequent and less complete data measured at 6-month intervals and interpolated in the months between for charting purposes. Methodology on the expanded historical series from 2004 to 2010 has not been updated.

Churchill Mortgage Expands Operations To Nebraska

Churchill Mortgage, a lender that provides conventional, FHA, VA and USDA residential mortgages across 46 states, announced its expansion with a new location in Omaha, Neb. Churchill’s newest addition to its operation will allow local borrowers to attain the resources needed to make better mortgage decisions.


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In Omaha, homes sells faster than any other large metro city in the United States, according to a national analysis by real estate franchiser Re/Max. With an average of just 32 days on the market, Omaha’s housing market is fiercely competitive. In comparison, the national average is 59 days on the market for homes in other large metro areas in the United States. 


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In response to this fast-moving market, Churchill has expanded into Omaha to support local buyers’ mortgage needs. The new office will be led by Cody Levinson and Lynette Arrasmith, offering more than 20 years of combined mortgage industry experience to the local community. Both have licenses in multiple states, including Nebraska, Iowa, Kansas, Missouri and Colorado. 


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“In a competitive market like Omaha, Churchill Mortgage helps homebuyers achieve their goals of home ownership,” said Cody Levinson, Omaha Branch Manager. “By providing the right tools, like Certified Home Buyer and Rate Secured, and a world-class experience, our borrowers are able to secure their home with peace of mind. We look forward to growing our team and our relationships with the local community.”


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“Churchill is excited to explore opportunities for borrowers and lenders with our expansion,” said Matt Clarke, COO and CFO of Churchill Mortgage. “Our goal is to help clients gain debt-free homeownership by acting as mentors throughout the process. Churchill’s superior customer service and resources, coupled with the years of experience provided by the leadership at our new Omaha operation, will help homebuyers capture the American dream.” 

Churchill is continuing to actively seek talented, driven mortgage professionals for its expansion efforts. 

AI Foundry Unveils First Ever Mortgage Document Model

AI Foundry, an artificial intelligence (AI) platform company, has launched its mortgage document model, adding new functionality to its next-generation Cognitive Business Automation Platform. The document model includes an extensive set of standard mortgage document types and common variants. It incorporates the latest in AI, machine learning and machine vision to deliver a higher level of automated classification and data extraction capabilities. This document model capability will enable the mortgage industry to use AI to replace multi-week manual processes, so that mortgages can be processed from “application to underwriting” in days, not weeks.


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For originators and banks who need the ability to automate loan reviews, the document model provides “out of the box” machine-vision-based functionality that classifies and indexes documents, dynamically identifies relevant data content within the documents, detects inconsistencies, applies rules for data validation and ultimately minimizes human interaction with the loan application material. Unlike other OCR and text-based solutions in the market, the document model uses advanced machine vision and deep learning techniques to ensure highly accurate levels of recognition and data extraction required for efficient automation. In addition, the model has standardized the process for supporting new mortgage document types or other documents that require curating and labeling of large numbers of samples and variants. 


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“The model enables any lender to upload its loan application material and in return receive fully indexed and extracted data within seconds. The model delivers 95 percent accuracy and was trained on more than 100,000 mortgage documents, 300 document types and 2,000 data extractions to date, using both cognitive and deep neural network techniques,” said Peter Piela, Ph.D., head of solution development at AI Foundry. “The percentage of accuracy using our vision technology is comparable to human manual processes, while legacy text classification approaches fall well short of this at roughly 80 percent accuracy. The impact of using our document model means significant time savings for the lender and the replacement of expensive manual processes with far more efficient automated ones. 


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“In addition to the document model, the platform contains a powerful rules engine that allows clients to create intelligent robotic agents to automatically monitor completeness, integrity and compliance. The rules engine enables users to make actionable inferences that trigger remedial events early in the document-processing and exception-handling phases, thereby reducing overall cycle time and the cost of remediation,” added Piela.


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AI Foundry’s plan is to make the document model available to customers as part of the Cognitive Business Automation Platform, so they can use the existing model as well as augment the capabilities of the base model to solve specific mortgage workflow processes. The model is continuously enhanced with new variants that are deployed to the SaaS environment, making it available to all customers. The Platform and document model can be deployed to eliminate a large number of manual activities, automating document-centric, labor-intensive processes with a high degree of accuracy, freeing employees from repetitive work processes and refocusing them to more value-added activities.