The Day of AI Reckoning: Part II

QUESTION

This article is the second installment of The Day of AI Reckoning, first published on September 9, 2026, which is a response to a reader who asked, in part:

A day of reckoning is coming, I promise you. Where's the regulation? Who's liable if AI makes a mistake? Who will reimburse me if I get sued because of an AI error? Why is there no quality control? Why are all these FinTech companies springing up all over the place with AI promotions? 

Let's get real. I have no confidence that AI technology is a new type of economic revolution. Maybe it is for the billionaires who run it, since it seems to be a revolution in how fast they can become mega-billionaires. 

Will there be a day of AI reckoning in mortgage banking?

COMPLIANCE SOLUTIONS 

AI POLICY PROGRAM FOR MORTGAGE BANKING™

Policies and procedures for artificial intelligence related to mortgage banking compliance administration, mortgage loan origination compliance, mortgage servicing compliance, and industry best practices—including, but not limited to, applicable federal and state banking and consumer lending laws. 

AI FOR MORTGAGE LOAN ORIGINATION - SALES MANUAL 

Sales Manual provides 9 chapters covering the full AI-powered origination funnel in a 90-day implementation roadmap, with clear team roles for fair lending, FCRA, and advertising compliance guidance built into every chapter. Sample AI prompts, an ROI tracking framework, and a compliance glossary.

RESPONSE

In Part II, we discuss:

• Capital Markets Are Starting to Ask the Same Question
• Public Is Rejecting the Infrastructure, Not Just the Valuations
• Data Center Opposition

____________________________________

Order the White Paper for Parts I, II, III

Distributed after publication of all three articles.

Orders distributed first come, first served.

____________________ 

Here are a few recent related articles: 

The Day of AI Reckoning: Part I

Will AI Replace Me?

AI Replaced Me

AI Versus Humans: A Dialogue

Overcoming the Fear of AI 

Capital Markets Are Starting to Ask the Same Question

Your skepticism showing up in mortgage compliance departments has a mirror in the capital markets. Through mid-to-late 2026, AI-adjacent equities have undergone a sustained, and at times sharp, repricing. Chipmakers lost over a trillion dollars in combined market value in a single stretch this summer amid concerns that AI infrastructure spending may be peaking faster than expected. 

Software stocks have fared worse than chips in some cases. For example, as I write, Oracle is down more than 50% from its late-2025 high, Microsoft is down nearly 10%, and Meta is down more than 20%. Two contradictory investor theories are driving them: on the one hand, AI will make incumbent software obsolete; on the other, software companies have overspent on AI without adequate returns. One thing I learned at Wharton is that contradictory investor theories are a huge warning sign. And in this case, both narratives can't be true. The market's inability to settle on one signals unresolved uncertainty about what AI is actually worth in production, not just in a demo. 

Meanwhile, the AI champs are rising. Whether you look at private-market valuations or explosive financial metrics, AI purveyors have grown staggeringly since late 2025. For instance, Anthropic (Claude) is up about 175%, OpenAI (ChatGPT) is up over 70%, Alphabet (Gemini) is up about 26%, and Google (DeepMind) is up 61%. Most of these have a knack for generating debt without generating a penny of profit.

The Day of AI Reckoning: Part I

QUESTION 

I am a long-time subscriber, and I'm grateful you have been writing about AI's impact on mortgage banking. My compliance officer bought your AI Policy Program. Our Director of Sales is considering getting your manual for AI in mortgage banking sales. So, I hope you will allow this long message from someone who has been in this business for forty years. 

We use AI in various areas, including operations, compliance, marketing, underwriting, and disclosures. I'm a CEO and loan officer. My company is in 15 states. I use AI in my loan origination and also in my private life. In my opinion, AI seems like a glorified search engine. But I still have to double-check it because it's throwing errors, and there's no quality control to ensure reliability. 

A friend of mine had to hire another compliance manager just to make sure that all AI output is strictly within federal and state guidelines. Instead of AI replacing compliance, he is adding to compliance to keep a watch on AI. And he tells me AI isn't saving him a dime. It is actually costing him more. It's tough enough to book loans in this economic climate; we don't need a new, unregulated technology to confuse us or our borrowers. 

And I don't get all the buzz about AI replacing me. It won't replace me. I don't have any borrowers who want to talk to an AI bot. We had an AI agent for a while, and borrowers hung up or logged off. They only want humans, such as me. I go to AI the same way I go to any search engine. It seems more like a consolidator of information, mostly plagiarized, and puts it into a readable, friendly format. This thing just doesn't seem like a revolution that is going to put us all out of work. 

A day of reckoning is coming, I promise you. Where's the regulation? Who's liable if AI makes a mistake? Who will reimburse me if I get sued because of an AI error? Why is there no quality control? Why are all these FinTech companies springing up all over the place with AI promotions? 

Let's get real. I have no confidence that AI technology is a new type of economic revolution. Maybe it is for the billionaires who run it, since it seems to be a revolution in how fast they can become mega-billionaires. 

Will there be a day of AI reckoning in mortgage banking? 

COMPLIANCE SOLUTIONS 

• AI POLICY PROGRAM FOR MORTGAGE BANKING™

Policies and procedures for artificial intelligence relating to mortgage banking compliance administration, mortgage loan origination compliance, mortgage servicing compliance, and industry best practices — including, but not limited to, applicable federal and state banking and consumer lending laws.

• AI FOR MORTGAGE LOAN ORIGINATION - SALES MANUAL 

Sales Manual provides 9 chapters covering the full AI-powered origination funnel in a 90-day implementation roadmap, with clear team roles for fair lending, FCRA, and advertising compliance guidance built into every chapter. Sample AI prompts, an ROI tracking framework, and a compliance glossary.

ANSWER 

Your concerns are complex and worthy of a detailed response. 

I'll answer in three parts and publish them here weekly, beginning with Part I today. 

Part I

• The pattern lenders are experiencing
• A regulatory framework closing in fast
• Who actually stands behind the output?

Part II

• Capital Markets Are Starting to Ask the Same Question
• Public Is Rejecting the Infrastructure, Not Just the Valuations
• Data Center Opposition

Part III

• What is the scariest compliance problem for AI in mortgage banking?
• Why This Looks Like an Implosion, Not a Correction
• Future or Futuristic AI for Mortgage Banking 
  _________________________________

Order the White Paper for Parts I, II, III

Distributed after publication of all three articles.

Orders distributed first come, first served.

Affordability and the Pull Back Effect

QUESTION 

I read your article last week on selling mortgages when rates are high. At my company, we are stuck in a sales malaise because our borrowers are facing high housing prices. Newspapers are calling it the "affordability ceiling." Whatever you want to call it, our borrowers are holding back. 

We can find workarounds for the rate, but there's nothing we can do about affordable housing. 

In today's sales meeting, we passed your article around about the rate issue. Now, we could use some feedback on why it is so difficult to sell mortgages due to affordability issues. Please be straight with us. We need answers! 

Why is affordability causing mortgage sales to slump? 

SOLUTION

AI FOR MORTGAGE LOAN ORIGINATION - SALES MANUAL

Most AI advice for loan officers is either a feature list with no compliance grounding, or a compliance memo with no growth plan. This sales manual is both — a chaptered, action-checklist playbook that follows your actual sales funnel from first contact to lifetime retention. Every recommendation accords with applicable regulatory compliance standards.  

ANSWER 

Affordability 

Let's start with an understanding of the word "affordability" in its common use. The current administration has been stating that it is a new media term invented by the political opposition. This misinformation has gone so far as to portray "affordability" as a "con job" or "hoax."[i] 

The word "affordability" is not an invented media term. The Oxford English Dictionary shows this noun dates back more than a century to the 1910s. It is obviously derived from the verb "afford" and the suffix "-ability." While the word itself is old, its heavy saturation as a primary political buzzword surged significantly during recent election cycles to describe cost-of-living pressures. 

For this article, I define "affordability" as the financial ability of people or households to pay for essential goods, services, or assets – such as housing, healthcare, or education – using their available income without going into severe debt or sacrificing other basic needs. 

The way I see it, affordability relies on a balance between what things cost and how much money a person or family earns. It means a person has enough money left over for basic living needs after paying for a major necessity. From an underwriting perspective, using credit may make something temporarily accessible, but true long-term affordability depends on sustainable future income. 

Affordability Ceiling 

And, yes, there is an "affordability ceiling." This is an informal economic term that gained prominence in the early 2000s. I first saw it in market analyses involving real estate and also in financial journalism articles. 

I would define the “affordability ceiling” as the maximum price, rent, or cost that buyers and renters can realistically afford based on their incomes. Once this limit is reached, consumers can no longer absorb price hikes, forcing changes in market behavior like downsizing or moving.

Now, let's go deeper into answering your question! 

The Combination Punch 

Home prices and mortgage rates are both staying high at the same time, and that combination is what's really squeezing buyers out of the market. That's quite a combination punch! 

Unfortunately, there is a core math problem: The median single-family home hit an all-time high of $440,600 in July, up 1.8% from a year ago, with prices having risen for 36 straight months. Meanwhile, mortgage rates haven't come down much. By June, qualifying for a mortgage on the median-priced home required $109,152 in annual household income, up from $93,552 in January, a $15,600 jump in just five months.[ii] The fact is, wages simply haven't kept pace with that kind of increase. 

Add to that the obstacle of rates rising alongside home prices. NAR calculates that in June, buyers needed to borrow at an effective rate of 6.57% (including points and fees), up from 6.19% five months earlier.[iii] Even modest rate upticks translate into real lost buying power. Indeed, one analysis found homebuyers lost about $11,000 in purchasing power between February and April alone, as rates moved from around 6% to 6.3%.[iv] 

The result of this combo punch is a reduction in closings and an increase in contract fallouts. It takes a higher percentage of applications to land a single sale. The purchase pull-through rate recently dropped to 78.9%.[v] As to contract fallouts, roughly 14% of pending sales fell out of contract in July. This is happening because borrowers struggle to meet debt-to-income (DTI) requirements or back out due to payment shock.[vi]

Selling Mortgages in a High Rate Environment

QUESTION 

We have been watching mortgage rates rise and rise, yet there seems to be no end in sight. I am a loan officer with a large mortgage lender. My pipeline has been shrinking due to the rate rise. This is not my first ride on the interest rate roller coaster – I got into this game in 1997 – but it seems much more uncontrollable now, more difficult to explain to my customers. 

I can't look them in the eye and give them a good explanation other than what we all read in the news. This is getting serious. At our sales meeting, we tried to come up with a sales strategy to explain why rates are rising and, really important, how we originate loans in such an high rate environment. 

Your name came up because you have many clients and can shed light on how lenders are grappling with the high rates that are causing borrowers to postpone financing plans. You have a broad perspective and could share some ways to help our customers move forward. 

What can we tell our borrowers about why rates are rising? 

SOLUTION 

AI FOR MORTGAGE LOAN ORIGINATION 

Most AI advice for loan officers is either a feature list with no compliance grounding, or a compliance memo with no growth plan. This sales manual is both — a chaptered, action-checklist playbook that follows your actual sales funnel from first contact to lifetime retention. Every recommendation accords with applicable regulatory compliance standards. 

ANSWER 

Like you and many others, this "is not my first ride on the interest rate roller coaster." In fact, my roller coaster ride goes all the way back to the 1970s. In those days, we went from about 7% in the early 1970s to over 11% by 1979. But rates continued to rise! By the early 1980s, the rate was over 16.5% and stayed in the double digits for most of the decade. But I know of loan rates then going to over 18%. When rates came down to about 10% in 1989, we broke out the champagne! 

And now? The 30-year fixed is averaging 6.58%. 

As the saying goes, "context matters." I took my handy HP 12c, calculated the average rate on 30-year fixed mortgages, and laid out the possible contributing factors. I think my outline provides some perspective. 

Here's my take on things. In the 1970s, the average 30-year fixed rate was 8.9%. The rate peaked in 1981 with an annualized average of 16.6%, and for the whole decade the average was 12.7%. 

But context matters! In 1970, the median sales price for a single-family home was $23,900; in the 1980s, it jumped to between $46,200 and $76,000 (depending on new construction vs. existing home sales); and in the 1990s, home prices rose again to between $79,100 and $149,442. 

And now? The average SFR price is hovering over $521,000. 

So, to put a fine point on it, in 1980, a homebuyer facing a 15% interest rate was borrowing against a principal that was only roughly 2 to 3 times the average household income. Today, a buyer facing about a 6.6% interest rate is often borrowing a principal that is 5 to 7 times the average household income! This makes the modern monthly mortgage payment highly sensitive to even minor interest rate fluctuations. 

On to your question!

You ask the compelling sales question about the current mortgage rate: how to explain to your borrowers why the rates continue to rise? I will answer with some economics and offer a few ways to keep a trusting relationship with borrowers. 

The first step is to address the economic reality. No equivocation. No politics. No mincing words. Borrowers know when a sales pitch is creeping into a discussion on economic reality. In the most important long-term investment of their lives, they are sensitive to nuances. You are not a forecaster, but you can be direct and clear. 

My view, which I give below, is not a forecast and should not be relied on for tax, accounting, regulatory, legal, insurance, or investment advice. I hope it helps to improve your ability to provide excellent service to your customers at the point of sale. 

WHY ARE RATES ELEVATED RIGHT NOW?

The immediate driver: bond yields, not the Fed directly.  

The 30-year fixed rate rose to 6.81% last week, the highest in a year, reflecting a surge in global bond yields after Fed Chair Kevin Warsh offered little guidance on whether or when the Fed might raise rates to combat elevated inflation. Given that kind of response from the Fed Chair, it is no wonder your customers are a bit skittish. 

Mortgage rates track the 10-year Treasury yield far more closely than the Fed funds rate itself, and that yield has been climbing. So what are the underlying causes?

Overcoming the Fear of AI

QUESTION 

This is not an easy question for me to ask. I have a prominent position in my company and community. The company originates mortgage loans in almost all the states. Our employees have written a petition requesting a slowdown in our plans to implement artificial intelligence. The petition has been leaked to the local news outlet, and it is causing a stir among our customers – and not in a good way. 

I can't say I disagree with the staff. I'm also worried. But we also have to keep pace with industry standards, which are moving toward AI. There are many known-knowns, but even more unknown-unknowns. People are losing their jobs to AI bots. It seems to me we are in the early stages of a full-blown unemployment crisis caused by AI. 

So, I will admit. I am afraid of what is happening and what is going to come. You have written a lot about AI in our mortgage industry. I want your advice on overcoming my fear of AI. I believe I speak for many people when I admit that I am worried about where we are heading. I know you're not a psychologist. I've been reading you for many years, and you've always offered sober counsel. I want to distribute your response to our staff. 

How can we overcome the fear of AI? 

SOLUTION

We recommend:

AI POLICY PROGRAM FOR MORTGAGE BANKING

AI FOR MORTGAGE LOAN ORIGINATION

RESPONSE 

Thank you for your question. Too often we push away our fears, denying them rather than admitting them. AI represents far more than an economic revolution. It poses challenges in many areas of human activity. That suggests there is not just a single fear of AI but many. 

You may want to read some of the articles I have written about AI. Click Here. 

I am going to offer a few antidotes to address some of those AI-related fears. 

FIRST: Name the exact fear 

The first thing to do is name the exact fear. When you bunch together conceptual categories like known-knowns and unknown-unknowns, you create a colossal stressor that embeds itself in your mindset. 

To make it easier for you to contemplate, I am going to provide an outline of certain types of fears. One or more of them may resonate with you. I will return to the importance of naming the fear later on. 

"Fear of AI" is really an umbrella for several distinct fears, and they call for different responses:

 

• Economic fear — "it'll take my job or devalue my skills" 

• Control fear — "it'll make decisions about me I can't see or challenge" (hiring algorithms, insurance pricing, content moderation) 

• Epistemic fear — "I won't be able to tell what's real" (deepfakes, AI-written text, and misinformation) 

• Existential fear — "it could become powerful enough to act against human interests" 

• Identity fear — "if a machine can write/paint/code, what's special about me doing it?" 

• Pace fear — not about AI specifically, but about how fast everything is changing and feeling like you can't keep up 

Once you know which one (or more) you're actually carrying, you can look for information and actions that speak to that fear specifically, instead of feeling generally unsettled by "AI" as a monolith. 

SECOND: Get direct experience 

Fear feeds on abstraction. The fastest way to shrink it is contact with the actual thing:

 

• Use a tool for something trivial and watch it get things right and wrong. 

• Deliberately try to make it fail. Ask it something it can't know, or something tricky, and see it hedge, get confused, or make an error. This is clarifying: it shows you're dealing with a fallible tool, not an omniscient force. 

• If your fear is job-related, look at how people in your actual field use these tools day to day, rather than trend pieces about "AI replacing X industry." 

Concrete, small-scale experience tends to replace catastrophic imagination with a more boring, accurate picture. 

THIRD: Understand the basic mechanics 

You don't need to code anything, just enough of a mental model to demystify it:

AI for Mortgage Loan Origination - New Manual

Introducing AI For Mortgage Origination! 

A Practical Manual for Growing Sales with Artificial Intelligence

We have received many requests for a manual that combines AI with sales and compliance. So we have created the "first in class" AI for Mortgage Loan Origination, a practical manual for growing sales with artificial intelligence, specifically meant for loan officers, branch managers, and sales leaders. 

 

This manual is a working guide for loan officers, branch managers, and sales leaders who want to use artificial intelligence to originate more mortgage loans without adding headcount or sacrificing compliance. It is organized around the loan officer's day-to-day workflow — finding borrowers, engaging them, moving files through processing, and closing — and shows where AI tools genuinely save time or lift conversion, and where a human still has to do the work. 

AI does not replace relationship-based selling in mortgage. It removes the repetitive, low-value tasks — data entry, first-draft content, routine follow-up, initial document review — so originators can spend more of their time on the calls and conversations that actually close loans.

HOW TO USE THIS MANUAL

Each chapter ends with an action checklist. Work through the manual in order the first time; after that, use it as a reference — jump to the chapter that matches the bottleneck in your pipeline this month.

THE APPROACH - FIVE POINTS IN YOUR FUNNEL

1 

Prospect Find likely borrowers in public & licensed data

2 

Engage Personalized outreach & 24/7 chat

3 

Qualify Conversational pre-qual & income checks

4 

Process Document classification & data extraction

5 

Retain Refi alerts & rate-lock triggers

WHAT' S INSIDE — 9 CHAPTERS + APPENDICES

GET A COPY

1 The AI Landscape for Loan Originators

        Where AI fits in the funnel, and what it still can't do.

2 AI-Powered Prospecting

        Predictive scoring and a compliant outreach workflow.

3 Lead Nurturing and Follow-Up

        Trigger sequences, rate alerts, conversational chatbots.

4 AI-Generated Marketing Content

        A repeatable brief-draft-edit workflow that clears compliance.

5 Pre-Qualification & Application Support

        Conversational intake and document intelligence.

6 Call Intelligence & Sales Coaching

        Turning sales calls into a shared coaching playbook.

7 Compliance, Risk & Fair Lending

        ECOA, FCRA, Reg Z, RESPA, UDAAP, 

        and a governance checklist.

 

8 Implementation Roadmap

        A 90-day rollout plan with clear team roles.

9 Measuring ROI

        The metrics that matter, and how to baseline them.

Most AI advice for loan officers is either a feature list with no compliance grounding, or a compliance memo with no growth

plan. 

This Manual is both — a chaptered, action-checklist playbook that follows your actual funnel from first contact to lifetime retention, with every recommendation according with Lenders Compliance Group's compliance standards.

GET A COPY

Deregulation Doesn't Mean Lower Risk

QUESTION 

My main concern is that AI is about to take over my human responsibilities. It may come as a surprise, but I am a lawyer who serves as internal counsel for a lender in 35 states. You might think that a lawyer should have nothing to worry about when it comes to AI. I started here two years ago. The company continues to grow. There were four lawyers in our legal department. Yet, now there are three. One of them was fired, and in her place is an AI tool. I have a feeling that I am next to go! 

What are we doing to ourselves? Why are we allowing AI to put us out of work and take our livelihoods from us? These are not humans, yet they can take our human knowledge, pose as humans, and replace us. I see the downsizing of AI replacing humans. 

We are using your AI Policy Program to help us navigate AI’s compliance risks. It looks like AI is here to stay. AI regulations should protect consumers, and AI should not threaten our jobs! 

I see slow-to-no AI regulations and very little understanding of how it will adversely affect humans.   

What is being done to regulate artificial intelligence? 

OUR COMPLIANCE SOLUTION

AI POLICY PROGRAM FOR MORTGAGE BANKING™    

Our AI Policy Program aligns with Freddie Mac's and Fannie Mae’s requirements.   

Our AI Policy Program consists of the following policies:  

1.       AI Governance Policy 

2.       AI Use Policy  

3.       AI Workplace Policy  

4.       AI Credit Underwriting Policy  

5.       AI Do & Do Not Policy  

6.       AI Ethics Policy  

7.       AI Vendor Management Policy 

8.       AI Mortgage Fraud Policy 

9.       AI Anti-Money Laundering Policy

Contact us for Information! 

RESPONSE 

You say AI is not human, and it certainly isn't. Indeed, the Internet and its derivatives, such as social media, are not human. The Internet, social media, and AI are all inanimate, lifeless, insentient, spiritless, uninhabited, inorganic, labyrinthine, concatenating chains that are composed of winding strands of human meaning. 

These chains have no significance other than the understanding we invent for them. They are not our essence. We follow those chains, each of them like endless sands on a vast beach. The sands are unlimited, but the ones in our hourglass are finite. 

We are Hansel and Gretel, following breadcrumbs that lead to the cannibalistic witch. Inevitably, these brute, cold, insensate vessels into which we pour our being do not know we are there. They are numb, dumb, and oblivious, soullessly mimicking us, like an alien intelligence whose center is everywhere. 

Attempts to regulate AI technologies have not shown much foresight. Some of this negligence is by design and stems from an inability to recognize its implications. The mad dash into a new, unregulated, or semi-regulated technology is hubris borne of money, politics, and ego. AI technologies are expanding at a rate that outpaces the development of regulatory frameworks to mitigate their risks. 

The alien intelligence is ready for us. Are we ready for it? 

Over the past year, federal regulators have sharply pulled back on AI-related enforcement, including fair lending. The CFPB has scaled back liability for disparate impact under ECOA. Bank examiners are conducting fewer fair lending risk assessments. The administration has made deregulation its explicit policy goal. It would be easy to read this as a green light. It isn't. 

"Deregulation" Doesn't Mean Lower Risk 

What's actually happening is a shift in venue, not a reduction in exposure. Enforcement is moving from Washington to state attorneys general, private litigation, and a separate federal statute that nobody has rolled back. For mortgage originators and servicers using AI in underwriting, pricing, marketing, or servicing, the practical compliance burden hasn't gone away. It is just coming from different directions, and those directions are harder to predict than a single federal rulebook ever was.

Cryptocurrency: Emergence of Nonbank Loan Products

YOUR QUESTION 

Substack  |  YouTube

I am the bank CFO who wrote you last year about my concerns regarding the fungibility of cryptocurrency, like that of the dollar. I was concerned and skeptical. Your response was helpful. I distributed it to our Board. Since then, I joined a nonbank as CFO. It is a large wholesale lender that has developed cryptocurrency loans – we literally use crypto to create new loan products. 

Nonbanks have much greater flexibility in cryptocurrency for product development. I have been astonished by the product rollout process and by how particularly high-net-worth and crypto-native borrowers are drawn to using cryptocurrency. I wonder how extensive this trend is spreading in the nonbank mortgage market. 

What do you think nonbanks will do to develop cryptocurrency loan products in 2026? 

OUR COMPLIANCE SOLUTION 

We suggest: 

AI POLICY PROGRAM FOR MORTGAGE BANKING™    

Our AI Policy Program aligns with Freddie Mac's AI governance requirements for Freddie Mac Sellers/Servicers. Responsible AI practices can help align AI system design, development, and use with applicable legal and regulatory guidelines.   

Our AI Policy Program consists of the following policies:  

1.    Artificial Intelligence Governance Policy 

2.    Artificial Intelligence Use Policy  

3.    Artificial Intelligence Workplace Policy  

4.    Artificial Intelligence Credit Underwriting Policy  

5.    Artificial Intelligence Do & Do Not Policy  

6.    Artificial Intelligence Ethics Policy  

7.    Artificial Intelligence Vendor Management Policy 

8.    Artificial Intelligence Mortgage Fraud Policy 

Contact us for the presentation and pricing! 

RESPONSE 

You asked a thoughtful question last year. Your main concern was that cryptocurrency had the same fungibility as the dollar. Indeed, your specific question was: "Should cryptocurrency be accepted in lieu of dollars for a down payment on mortgages?" 

Nonbanks are using cryptocurrency innovations to gain market share from traditional banks, which remain more constrained by federal safety and soundness regulations regarding crypto exposure. Coming from banking to the nonbank world, you will surely find a strong interest in developing more ways to offer new residential loan products. 

Cryptocurrency continues to grow in popularity. Nonbank mortgage lenders are the primary drivers of cryptocurrency integration in the mortgage market as of 2026. Because they operate with more regulatory flexibility than traditional commercial banks, nonbanks are using crypto to create new loan products, streamline underwriting for digital asset holders, and leverage blockchain to lower operational costs. 

I noted that you referred to two types of cryptocurrency borrowers: high-net-worth and crypto-native. I'm sure most of us know what "high-net-worth" means. 

AI has a significant role. Without AI-driven underwriting, risk modeling, and document automation, crypto mortgages would remain a niche product for wealthy borrowers. I discuss AI below. 

Many may not know what a "crypto-native" borrower is: a cryptocurrency investor with the knowledge to use crypto-financial instruments independently. That is a widely used definition, but in my opinion, it is too broad and a bit misleading, because millions of people in the crypto market should stick to the dollar. Perhaps I will discuss this type of borrower in a future article. 

Cryptocurrency is fundamentally changing mortgage banking in 2026 by shifting from a speculative niche into a recognized asset class for loan qualification and collateral. Key shifts include Fannie Mae's historic decision to accept crypto-backed mortgages and the mainstream integration of digital assets into standard underwriting processes. 

Mainstreaming Integration & New Mortgage Products 

Major financial players have introduced products that treat cryptocurrency as a legitimate financial asset rather than a liability or a "black box". 

For instance, Fannie Mae-Approved Crypto Mortgages launched on March 26, 2026, with Fannie purchasing loans in which Bitcoin or USD Coin (USDC) was used as down-payment collateral.

AI Versus Humans: A Dialogue

Substack

YOUR QUESTION 

I've read your posts on AI with considerable interest. I am the owner of a Fintech organization that provides AI to mortgage companies. My partners and I get your posts all the time. Few people in the mortgage world seem to be as honest and forthright as you. We have suggested to our clients that they sign up for your AI Policy Program. We want our customers to be fully engaged in working with AI. I am writing you about a disagreement that I have with your portrayal of AI as eventually replacing humans. 

Please engage with me in a discussion of my view. It's OK with me if you want to publish our dialogue. The more discussion, the better for everyone. But I think the gloom-and-doom perspective overlooks the nuances and is not historically valid. 

There is a fundamental error people have about AI. They look at the economy and see a fixed amount of work to be done, like a pie that can only be sliced smaller and smaller as machines take bigger bites. Critics of AI say that AI users see humans as a competitive resource to be eliminated for a finite amount of work and a finite number of problems. This is fundamentally, totally, and completely wrong. 

Does AI adversely affect jobs in the mortgage world? 

OUR COMPLIANCE SOLUTION 

We suggest:

AI POLICY PROGRAM FOR MORTGAGE BANKING™   

Our AI Policy Program aligns with Freddie Mac's AI governance requirements for Freddie Mac Sellers/Servicers. Responsible AI practices can help align AI system design, development, and use with applicable legal and regulatory guidelines.  

Our AI Policy Program consists of the following policies:  

1.    Artificial Intelligence Governance Policy 

2.    Artificial Intelligence Use Policy 

3.    Artificial Intelligence Workplace Policy 

4.    Artificial Intelligence Credit Underwriting Policy 

5.    Artificial Intelligence Do & Do Not Policy 

6.    Artificial Intelligence Ethics Policy 

7.    Artificial Intelligence Vendor Management Policy   

8.    Artificial Intelligence Mortgage Fraud Policy

Contact us for the presentation and pricing! 

RESPONSE 

I do not see AI as gloom-and-doom; however, I do recognize that it poses significant risks of many kinds. Being aware of those risks may enable preparation for remedies and mitigation of certain adverse, consequential outcomes. 

I have stated my point of view in several speaking engagements and numerous articles, some of which are: 

AI Replaced Me 

Will AI Reduce Fair Lending Violations? 

Will AI Replace Me? 

Freddie Mac Deadline: March 3, 2026 – AI Governance Framework 

Shadow AI in Mortgage Banking 

AI Credit Score Underwriting 

Visit our Compliance Topics to find more articles relating to AI. 

I will not spend time here outlining my perspective fully. For those interested, please read my articles. I always encourage questions and comments. You can contact me here. 

I will provide your views and my responses thereto. For editorial reasons, I will embolden the commenter's statements and follow them with my responses. Also, for editorial reasons, I will publish the two main theses of their opinion, thereby providing both their view and mine. I will include definitions in italics when I think a technical word requires a brief definition. Let's begin! 

Commenter's View 

This is the fundamental error of AI and job doomers. They look at the economy and see a fixed amount of work to be done, a pie that can only be sliced thinner as machines take bigger bites. They see humans as a competitive resource for a finite amount of work and a finite amount of problems to solve that must be eliminated. This is fundamentally, totally, and completely wrong.