Sarah Wheeler: Let’s talk about the role that technology plays in making it easier for small lenders to do these things. At this point, let’s talk about AVM’s new CFPB rules.
Rohit Chopra: I think evaluation is a big problem. What we want to make sure is that we saw this 15, 20 years ago – the problem of overvaluation. And then we also see evaluation bias and other underestimation issues. We do need accurate assessments. The CFPB certainly thinks so. Of course, human assessments and machine-driven assessments will be part of the market.
So one of the things we do is try to make sure that these algorithm-based assessments, especially as artificial intelligence is going to advance, really put some checks on it when it comes to conflicts of interest. bias. I think we’ve made some very common sense points about making sure that artificial intelligence and algorithms aren’t just good for some people.
SW: I think AVM is one of those problems that we can really understand from a common sense perspective. If you think about all the properties that were appraised during the refinance boom — a lot of properties went through that process and we have a lot of information about them now. How does this relate to what you want to do with AVM?
RC: I think our work on AVM is really just about accuracy, but I think you asked more broadly about the role of technology and how automation can really become more of a part of the mortgage system pipeline.
I think we’re hearing a lot of concerns about the merger and consolidation of some of the large vendors and software technologies. We hear from mortgage lenders all the time about ice. I think a lot of the big technology providers are growing in power, and that’s not unique to mortgages. We see this with smaller banks, which rely heavily on a few large software platforms. We see this with car dealers. We see this in every corner of the economy.
I think the big question is: Who will really benefit from automation? Will these benefits be shared broadly with consumers and lenders? Or will it just create more gatekeepers to tax every mortgage in the country?
SW: What do you see as the CFPB’s role in this regard? For example, the ICE merger was approved, but they made some changes – promoting some different parts of the Black Knight universe to other companies. So what do you see as the CFPB’s role in this?
RC: Well, understanding mortgage technology is really key. One thing I wish more people in the mortgage industry could help us think about is: What is the digital future of the mortgage market? As many of you know, the CFPB has been developing more rules to promote so-called open banking.
Open Banking refers to the possibility of a smoother and more competitive banking system for financial products. We’ve started the process of giving consumers the power to allow their bank account data, their transaction account data, and to allow various types of lenders to use that data. But we’re trying to think about how the mortgage system can benefit from open technology.
One of the ways we can address the issue of credit report and credit score price gouging may be to consider how consumers can provide their credit report information directly to lenders, or be able to provide their cash flow in new ways that lenders offer different underwriting methods .
There’s a lot of this happening in the industry today, and I think we want to make sure that we support all efforts to help consumers and lenders and not just concentrate power on a few big tech companies.
