SOLANO REAL ESTATE SCENE Artificial intelligence and real estate

Icalled AAA three years ago from my cellphone and the customer service was out of this world. My phone call was answered, and I was prompted to punch in my AAA account number. I was immediately connected with a customer service woman. She politely said something like, “How are you Mr. Porter, what can I do for you today?” I said my darn battery was dead and my jumper cables were not working. I think she somehow knew I was calling from my home on my cell and asked if the car was there with me and I said, “Yes.” She then said with a little bit of a warm southern country drawl, “Well golly Mr. Porter, I can have a technician over there in 30 minutes.” I said that would be great. She asked if there was anything else she could help me with today, I said, “No thank you ma’am,” and then she said something like, “in that case Mr. Porter, thank you for the call, have a nice day,” and hung up.

I was texted immediately with a confirmation and then it dawned on me that I just had a delightful back-and-forth conversation with a robot. AI is real and it isn’t getting dumber.

I have no idea what the real estate industry will look like in 2050 but I am sure that for the next 10 to 15 years, robots will not be driving buyers around in self-driving cars showing houses, but 2050 is right around the corner.

When Freddie and Fannie started using artificial intelligence for underwriting, I was worried that computers would not be able to see the whole story or make credit decisions based on common sense. I was concerned that it would be a lot tougher for people to qualify because a computer cannot read a letter of explanation from a borrower about why something negative is on their credit report or explain a gap of employment.

I was wrong.

Yes, FICO scores have become a dominant part of the mortgage world, which occasionally really stinks because some people have perfect credit or maybe very little credit and no debt, or some may have reporting errors on the credit report, which can result in a low FICO score.

One thing is certain, though, the artificial intelligence underwriter rarely wakes up on the wrong side of the bed in a bad mood. Prior to AI, loan approvals were manually underwritten by humans and if the underwriter came into work after a huge fight with his or her spouse or if the underwriter had just been reprimanded by their boss for being a little too loose on a loan approval the week before, us loan officers would have to beg or fight for the approval or go over the head of the person to their boss, which was never fun. Pizza, chocolates and flower deliveries to my underwriters were very common back in the day.

Every bank, credit union and mortgage banker uses the Freddie-Fannie AI program or some type of proprietary system to approve or deny loans and only rarely are exceptions made because the AI works effectively with no emotions involved, and approvals are based on the level of risk, the odds and analytics, and the quality of the loan application input by the loan officer. Great loan officers know how these systems work and what the robot underwriter likes and dislikes. The robot is color blind and emotion free. It’s all about the math.

Jim Porter, NMLS No. 276412, is the branch manager and senior loan adviser of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.

CALL 707-427-6989.