AI Data Centers: Physical Limits - Part II

INTRODUCTION 

This article is Part II of a three-part series on AI Data Centers. These articles are a response to a reader who asked these three questions: 

1. Which public issues are impacting AI Data Centers? 

2. A few of us believe their expansion is limited by physics. Is that so? 

3. And how long will this last? Is an AI bubble forming? 

In response, I am answering in three parts, as follows: 

·       Part I: Public Backlash 

·       Part II: Physical Limits 

·       Part III: AI Bubble

Listen to it first and then read it afterward!

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. Currently, it consists of nine policies, with more planned.

AI FOR MORTGAGE LOAN ORIGINATION - SALES MANUAL

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

RESPONSE 

The physics: why you can't just build faster 

I concentrated in math and science in college, specializing in symbolic mathematical logic, and I have peer-reviewed papers in that field for scholarly journals. Computer science is not my specialty, but I studied it, and for over fifty years I have taken part in science and physics forums, including on artificial intelligence (AI). Today, I contribute regularly to two math groups whose members include leading AI experts and academics. 

Here, I want to give a layman's view of the physics of AI Data Centers, because the physical limits shape everything else. Parts of this article are technical. If that's not for you, stay tuned to Part III, coming soon, where I discuss whether there is an AI Bubble. 

In my view, the binding limit on AI Data Centers is no longer silicon. It is the physics of moving energy in and heat out, plus the slow-to-build infrastructure that does both. The International Energy Agency (IEA) projects that global data center electricity use will more than double, from 415 terawatt-hours (TWh) in 2024 to 945 TWh by 2030. One TWh is a trillion watts running for one hour, or roughly what 100,000 American homes use in a year. 

Every watt becomes heat 

Let's begin with the law of conservation of energy: energy is never destroyed, only converted. It is unforgiving! Nearly all the electricity fed to a Graphics Processing Unit (GPU) leaves the building as heat. 

A GPU is a chip that performs thousands of calculations at the same time. It was built to draw graphics, images, and video, but that same ability to process huge amounts of data at once now powers AI, machine learning, and scientific research. 

The largest AI Data Centers are gigawatt-scale facilities, called a GW Campus in AI Speak. Each uses one or more gigawatts (1,000+ megawatts) of electricity to train and run frontier models, the most capable AI models available at any given time. 

Now, please follow me, as I bullet the physics:

AI Data Centers: Public Backlash - Part I

QUESTION 

We are a mortgage lender in Northern Virginia. An AI Data Center was built in our area, and it is causing havoc with our business. We have branches in Texas, Ohio, and Georgia. Data centers are being built or are under construction in those areas. These are our key states for originating mortgages. Property values have gone down because of these data centers, and that has caused our loan originations to plummet, both in refinances and purchase money. 

As far as I can tell, you are the only one telling it like it is in the AI compliance world. My question is indirectly about compliance because we are concerned about our investor partners. Some of them are now pushing back on appraisals and LTV ratios. Quality control is being impacted. I handle sales. Our loan officers are suffering an unprecedented downturn. Lenders that are not affected by AI Data Centers near their markets will eventually feel the same downturn that we are – there's no escaping it! 

In our sales meeting, we put together three questions for you. 

Which public issues are impacting AI Data Centers? 

A few of us believe their expansion is limited by physics. 

Is that so? 

And how long will this last? Is an AI bubble forming? 

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 

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

RESPONSE 

I will answer your questions in three parts, as follows:

·      Part I: Public Backlash

·      Part II: Physical Limits

·      Part III: AI Bubble

In my previous series, The Day of AI Reckoning, I discussed how the public is rejecting the infrastructure and the overall data center opposition. I discussed several compliance risks, some of the compliance ramifications, and why there might be an AI implosion, not a correction.

I get the AI sales pitch: America is building the largest energy-consuming industry of the decade in about five years, and three problems are colliding at once. You have asked three fundamental questions, which I will endeavor to answer. Neighbors are revolting over bills, water, noise, and air. Physics and the grid cap how fast power can arrive and heat can leave. And the bill – well over half a trillion dollars a year – is increasingly being paid with borrowed money. 

The three are linked: the physical constraints drive the local backlash, and both shape whether the financing ends in a productive build-out or a bust. 

Public issues: who pays, who breathes, who drinks! 

The core public complaint is that AI data centers concentrate their costs locally on power bills, air, water, and quiet, while their benefits flow elsewhere. By 2026, that complaint has become one of the few genuinely bipartisan political forces in the United States. Let's break it down categorically, with the caveat that my view reflects current and potential future conditions. 

Electricity bills 

Data centers are not the only reason power is getting more expensive, but they are now a leading one. I used PJM's independent market monitor, which concluded that expected data center demand drove about $23 billion in customer price increases that will persist through at least 2028. Fortune published an article showing how data centers have hiked electricity prices.

The Day of AI Reckoning: Part III

QUESTION 

This article is the third installment of The Day of AI Reckoning. 

·       Part I was published on September 9, 2026.

·       Part II was published on September 16, 2026. 

The three-part article 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 everywhere 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 

The Sales Manual provides 9 chapters covering the full AI-powered origination funnel in a 90-day implementation roadmap, with clear team roles and 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 III, we discuss: 

• 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 free White Paper for Parts I, II, III

Distributed after publication of all three articles.

Orders distributed on a first-come, first-served basis.

____________________  

Here are a few recent related articles:  

The Day of AI Reckoning: Part II 

The Day of AI Reckoning: Part I 

Will AI Replace Me? 

AI Replaced Me 

AI Versus Humans: A Dialogue 

Overcoming the Fear of AI  

WHAT IS THE SCARIEST COMPLIANCE PROBLEM 

FOR AI IN MORTGAGE BANKING? 

The single scariest compliance problem would be the invisible, scaled fair-lending discrimination that nobody detects until it has already happened to thousands of borrowers – with no one accountable to fix it.

 

From speaking with many people in compliance about AI, the following outline is the scariest scenarios that keep them up at night!

 

·     Scary Scenario # 1: It's not a one-off error. It's the same error, repeated at scale, silently.

 

When a human underwriter makes a bad call, it's one file. When an AI model has a systematic bias baked in through training data, proxy variables, or model behavior nobody fully audited, it makes the same bad call on every similar file, every day, across every lender using that model or vendor. 

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.

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.

How to Prepare for a Global Recession

YOUR COMPLIANCE QUESTION 

YouTube

I am the CFO of a Mortgage REIT, a residential mortgage lender, and a mortgage servicer. Our board met to discuss what could happen to our mortgage originations in the event of a global recession. Our secondary and capital markets department is already gearing up for a recession. Our loan originations were affected by rising rates – and not in a good way. Our margins have been compressed, and hedging is difficult. 

Your name came up in the meeting, as one of the board members knows you. The thought was that you have many clients and probably have a good idea about the overall condition of the mortgage banking industry and how it can prepare for a recession. Because of your place in compliance and risk management, she feels that you could shed light on how we can prepare for a recession. Thank you for considering our question! 

How can a mortgage lender protect itself in a global recession? 

OUR COMPLIANCE SOLUTION

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  

Contact us for the presentation and pricing!  

RESPONSE TO YOUR QUESTION 

Our clients often discuss how their compliance failures result in direct financial losses. During a period of financial stress, a lender scrambling to address compliance deficiencies while also managing credit losses and liquidity pressures faces a compounded crisis that can accelerate failure. In this article, I want to address your specific question about what happens in mortgage banking in a global recession and how to prepare for it. 

Compliance Amplifies Everything 

Let me state at the outset that compliance during a recession amplifies everything! Specifically, in a recession, the compliance-stability connection intensifies because: 

• Regulators increase examination frequency and scrutiny, 
• GSEs conduct more aggressive post-purchase file reviews, 
• Borrower complaints rise sharply, triggering CFPB investigations, 
• Desperate borrowers and originators increase fraud risk, making compliance controls more critical, 
• Investors have less tolerance for defects and push repurchases more aggressively, and 
• State attorneys general become more active in mortgage enforcement. 

A lender entering a recession with a strong compliance foundation is dramatically better positioned than one carrying hidden violations that regulators and investors are about to discover. 

Fundamental Rule 

Here's the fundamental rule to planning for a recession: 

Lenders who prepare during good times survive recessions;

lenders who assume good times last forever do not. 

The 2008 crisis wiped out hundreds of mortgage companies that were profitable just 18 months earlier. The ones that survived – and thrived afterward – had built conservative balance sheets, diversified channels, and operational flexibility long before the storm arrived. 

Let's zoom out to the implications of a worldwide recession on mortgage banking. Understanding its impact on the banking ecosystem will give us a perspective on how a lender can protect itself in a recession.

AI Replaced Me

YOUR COMPLIANCE QUESTION

YouTube

Two weeks ago, you wrote an article titled Will AI Replace Me? When I read it, I was still employed. Well, it's two weeks later, and I have been fired and replaced by an AI bot. I am still in shock. I really did not think my job was in jeopardy. Other people in my company were also fired and replaced by AI bots.

 

Yours is the only compliance firm I have come across that explains the positives and negatives of artificial intelligence. I guess, for me, it is a big negative. I have been in the mortgage world for over twenty years. My main positions were in underwriting, processing, and closing. I have looked around for work, and nobody's hiring. I'll bet those positions are now using AI bots.

 

I don't know what to do next. I'm only forty-five. I have limited savings and a small family. I feel like I'm getting squeezed out of the mortgage industry. A group of us met with our company's COO, and she said the company is moving rapidly toward AI across its origination process. So, it looks like I'm heading for a dead end. It feels like I'm being thrown on a trash heap.

 

What is happening with these AI bots? 

Is it Us (the humans) against Them (the AI bots)?

 

Signed,

Jobless

 

OUR COMPLIANCE SOLUTION

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  

Contact us for the presentation and pricing! 

 

RESPONSE TO YOUR QUESTION

 

This is a scary time as the world embarks on this new era of AI technology. Unfortunately, unemployment will increase as AI replaces human workers. The change will not be one-for-one. In some cases, it will be far worse, as one AI bot can replace hundreds of humans on a task, especially in loan processing, underwriting, and other operational roles. I'm going to be brutally honest with you: underwriters are among the more commonly cited "at risk" roles in mortgage banking.

 

WILL AI REPLACE YOU

 

In the March 19^th article you cited, Will AI Replace Me?, the concern expressed was from a loan officer. However, I stated the following AI automations that, as implemented, would adversely affect the need for humans, as follows: 

·       AI underwriting engines can now complete the entire initial underwriting process autonomously, approving loans days faster than traditional methods. This process is probably the clearest current example of loan origination being removed entirely from human hands. 

·       Unfortunately, loan processors, underwriting assistants, compliance analysts, escrow coordinators, closing personnel, and data entry clerks are at the intersection I described above, where humans and mimicking humans reside. 

In the March 25^th article, Will AI Reduce Fair Lending Violations?, I noted, in pertinent part, that "AI can streamline underwriting, reduce operational costs, and identify creditworthy applicants that traditional credit scoring methods might overlook." 

SYSTEMIC CHANGE 

The transition is systemic, not particularized to just your company, loan products and services, region, or institutional type. From point of sale to securitization, AI is quickly becoming embedded. AI is already doing a lot of what junior underwriters used to do. And, as you know, Fannie Mae's Desktop Underwriter and similar automated systems have been handling straightforward loan approvals for years. That trend is accelerating due to artificial intelligence.