Key facts
- NEO Home Loans president Ryan Grant discussed AI's impact on mortgage production costs and workforce transformation.
- Grant estimated NEO's cost to produce a loan at $700-$800 for direct-to-consumer and $1,200-$1,300 for retail.
- Underwriter productivity has increased to 8-10 loans per day, with about half requiring minimal manual intervention.
- Closers and funders have seen productivity gains of approximately 90%.
- NEO aims to operate at 75% staffing capacity to allow for growth.
- Gaining employee trust in AI is a key challenge, with NEO addressing it by making AI the primary system.
Ryan Grant, president of NEO Home Loans, returned to the HousingWire AI Summit to discuss his company's technological advancements and partnership with Better Mortgage. This follows a significant leadership change at Better, where CEO Vishal Garg stepped down and was succeeded by interim CEO Daniel Lewis. Grant characterized the leadership transition as a natural evolution for Better, suggesting the company needs to focus on executing its existing technology platform before further innovation.
Despite concerns about profitability and spending following the leadership shakeup, Grant asserted that Better has only begun to tap into AI's potential within the mortgage industry, aiming to move from a human-centered model to one driven by technology. He highlighted how AI is impacting the cost of producing loans, emphasizing the need for a standardized definition of 'cost to produce.'
At NEO Home Loans, Grant detailed how AI has dramatically increased productivity. Underwriters, who previously handled two to three loans daily, can now manage eight to ten, with roughly half requiring minimal manual intervention. Closers and funders have seen their productivity rise by about 90%. Grant estimated NEO's cost of production to be between $700 and $800 per loan for its direct-to-consumer operations and $1,200 to $1,300 for its retail business, excluding sales and origination commissions. The higher retail cost is attributed to handling a wider range of products.
Grant also addressed the workforce implications, stating that NEO has grown by 100% in the past 18 months, driven by both new hires and increased production from existing teams. The company aims to maintain 75% staffing capacity to accommodate potential increases in mortgage volumes. He noted a shift away from traditional processor roles, with preapproval and loan specialists now focusing more on the consumer experience, allowing mortgage professionals to engage more directly with clients.
Overcoming employee resistance to AI adoption is a significant hurdle. Grant shared an anecdote about a new underwriter manually reviewing AI-processed loans, underscoring the need for employees to trust the technology. NEO has fostered this trust by integrating AI as the primary system for employees, rather than an optional tool, leading to full adoption, though employees are still learning to leverage its advanced capabilities.