In this edition I discuss takeaways from the MBA Technology and Servicing Conference in Hollywood, FL, some tasks that might be good candidates for AI in loan servicing and some solid article links.
Hopefully you find it useful and fun. Please feel free to share with anyone that may be interested and have a great weekend!
Matt Basile
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Enjoyed an energizing week of discussions and brainstorming with closers and servicing folks at the MBA Technology and Servicing Conference in sunny Hollywood, FL. 🏝🌞
Below are a few takeaways from the closing committee roundtable session moderated by Jeannette Harry, Mary Funderburk and Melanie Lewis. Nice work as always!
😲 Insurance - The fast moving changes to the insurance industry continue to be a hot topic and it was helpful to hear most of the folks in the room were experiencing the same challenges and exceptions from coverage from insurers. This problem probably won't get easier anytime soon.
✔ Title and Escrow - This was a continuation of last year's discussion relating to funding through title agents and most confirmed they will not fund through title agents. Most closers were usually OK with bifurcating title and escrow to allow the local title agent to write the policy on national paper and have the national title company handle all funds to prevent any fraud concerns.
📈 Deal Volume - Across the board deal volume seemed to be up and some lenders reported closing hundreds of loans last year with the expectation that this year would be even busier. Many expressed an interest in trying to leverage technology to speed up some tasks since almost all were being ask to do more volume with the same or less resources.
🏝 Work Life Balance - Increased workloads highlighted the concern around burnout and many expressed that hybrid workplace policies were a saving grace to preventing burnout. Especially those servicing west coast clients. I have written often about attorney burnout rates, but this is probably a theme across most deal based work where speed and volume are always important to the business teams.
Overall a great session and look forward to engaging with this group going forward! 🚀⚡🧨
One of the great aspects of being in person for a few days at a conference is the opportunity for deep dive smaller conversations at coffee shops, cocktail parties, bars and restaurants. ☕🍷🍗
Since many of the folks at this conference were in the CREF servicing industry it was a good chance for our team to shift the lens of how we are applying AI from closing to servicing.
Below are a few hot topics that we spent time discussing relating to AI and CRE servicing:
👋 Loan Onboarding - Almost everyone we talked to noted the pressure to quickly onboard loans into their servicing software. Right now most teams get loan documents, third party reports and some other closing documents and need to get structured data into their servicing system within 5-7 days. This is a great task for AI due to the ability to customize to each lender's requirements and the heavy reliance on extraction of text.
📈 Operating Statements - Several servicers noted that they are already using AI to help standardize the review of property operating statements (i.e. standardizing different categories of expenses to fit into a standard underwriting model to test things like DSCR). I expect this will become more widespread.
🏭 Lease Reviews / Summaries - Almost all servicers expressed that they needed help with reviewing and summarizing leases and that it is a common bottleneck. This is a great fit for AI and any time improvement will improve speed to review and accuracy.
😲 Insurance - Again this is a problem. While closers need to approve the insurance package at closing, servicing teams have the unenviable job of reviewing renewals and often there is not the same focus as at closing to clean-up deficiencies. We are hard at work building an insurance solution for closing and we will be sure to include this in the scope.
👮Compliance with Loan Documents - There was an entire session on how to monitor compliance with loan documents. Although the focus wasn't on using AI, I think there are a lot of tasks that could be improved here and you might catch things with AI that you would not consistently find reviewing reporting and other data submitted by the Borrower periodically during the term of the loan.
We also heard from some tech folks, who emphasized that when designing AI applications it is important that the user can validate that the data extracted or summarized by the AI app. I thought this was a great takeaway for anyone building.
Another important test to apply to anything you are building is to make sure you are getting at least the same or better accuracy, but with at least 50% savings.
If you can hit this metric, whatever you are doing is worthwhile and efficiency will only improve as the underlying models improve. Good stuff all around.🚀⚡🧨
We are in the early stages of putting together a commercial real estate finance AI working group consisting of a relatively small group of closers / underwriters / servicers from lenders to work together to build AI apps to help improve speed and accuracy in originating mortgage loans. ⚡
To give you an idea of what we are working on, below are a few of the apps folks are using now:
1️⃣ Title Commitment Review (summaries and automate request for pro forma)
2️⃣ Survey Review
3️⃣ Pro Forma Review
4️⃣ Zoning Report Summary
5️⃣ Lease Summary
6️⃣ Blanks and Bracket Check
Outside counsel is also welcome to join the group if you bring a lender client to join the discussion. If you are interested or you know someone that would be a good fit drop me a note and I can give you more information! ⚡🚀🧨
Very well done article by Ted Theodoropoulus on how the future of Big Law can look by leveraging alternative business structures. Many are focused on KPMG entering the legal market, but I think the real change is going to come from small boutique law firms surfacing over the next few years that are powered by tech and are nimble enough with their fee structures to challenge big law models that have been in place for hundreds of years.
Interesting take on why billable income alone is not enough to show that a firm is making money. Although this is an accounting / consulting firm, this should serve as motivation for all businesses that sell time to find ways to really create efficiencies with AI and change their profit model.
Nice summary here of OpenAI Academy from Chris Donnelly. If you want to get up to speed on the latest prompting techniques and new features from OpenAI this is a great resource.
College one of the best times of your life and you know it while you are experiencing it. ⚡🏝
I remember listening to Bob Dylan’s Dream toward the end of the last year and reflecting on the last verse:
I wish, I wish, I wish in vain.
That we could sit simply in that room again.
Ten thousand dollars at the drop of a hat.
I'd give it all gladly if our lives could be like that.
We knew the moment was fleeting. You want to stay forever but the real world and responsibility awaits and you know it. 🎵
I am getting ready to head back to Worcester for my 25 year college reunion and have spent some time reflecting on what my 4 years at Holy Cross meant to me and how it shaped me both personally and professionally. Aside from the life long friends, learning and memories from being part of the last cell phone free class to graduate college, there are three core character traits that jump out that have carried through to my professional life and have been invaluable in starting and running a business.
🚀Innovative Spirit - No one I knew started any ground breaking business at college, but we sure did learn how to brainstorm creative new ways to have fun like creating a quiet room in our house, party themes like masters mini-golf or a hurricane party, the multi week long non-basketball version of the NCAA tournament or a 24 hour road trip to play catch at Field of Dreams in Iowa. ⛳⚾🏀When you have nothing but time on your hands, you apply your creativity to fun. Now that same creative spirit drives building new products and redefining how work gets done. Different kind of fun but it’s the same skill.
🌎 Putting Others First - One of the core Jesuit values that I took away from my time at Holy Cross was to live as a man and woman for others. It was subtly taught, but there are so many examples of our classmates that lived it and drove us all to be better and try to help others in our actions. In particular, we remember John Price ('01) whose work with Big Brothers / Big Sisters still lives on in Worcester. This spirit was a driving force behind co-founding Building Bridges Worldwide with Ted Egner ('00) and lives in every decision I make building my businesses to make sure we do the right thing instead of the easy thing.
🧠 Growth Mindset - From the classroom and through brainstorming ideas with classmates, we developed a passion for continuous learning and curiosity. "Challenges are what make life interesting, overcoming them is what makes life meaningful". The path forward in building a start up is never clear and you never have everything figured out and the growth mindset is key to enjoying the ride. 🚀🧨🎉
I am excited to get back to Holy Cross this weekend to reconnect with classmates and share stories and catch up on life both personally and professionally. Below are a few artifacts to go with some of the stories above that if you know what they are you will enjoy them!
Reach out to schedule a demo to brainstorm how we can help transform your loan management process and close more loans faster.
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