Optimal Blue has officially launched Virtual Economist, an artificial intelligence and machine learning-powered forecasting tool designed to assist mortgage capital markets leaders in analyzing interest rates and mortgage lock volume. The company also announced the establishment of Optimal Blue AI Labs, an initiative spearheaded by Kevin Foley, its newly appointed director of AI Labs, aimed at expediting the development and implementation of AI capabilities throughout its product offerings.
During a discussion at the AI Summit in Dallas, Foley explained that Virtual Economist forecasts interest rates and market volume under various macroeconomic scenarios, enabling lenders to better plan business growth. The tool integrates public economic data with Optimal Blue's proprietary mortgage lock volume data, which accounts for over 35% of national mortgage locks. Its machine learning models generate forecasts and allow users to simulate scenarios involving the 10-year Treasury, mortgage-backed securities spreads, and primary-secondary spreads.
Foley emphasized that the true value of AI in the mortgage industry lies in providing an "harness" around AI models, which incorporates a company's specific institutional context, systems, and processes to address industry-specific challenges. He cautioned that while AI models have advanced, they often lack understanding of specific industry nuances. Foley also highlighted potential operational challenges with increased AI adoption, such as rising costs associated with API pricing and the necessity for employees to review AI-generated outputs. He advised companies to implement dashboards for monitoring AI spending and evaluating return on investment.
The new AI Labs will function as a centralized hub and incubator for AI initiatives, focusing on identifying, developing, and governing AI across Optimal Blue's product ecosystem. The goal is to deliver AI capabilities more rapidly to solve real-world problems for lenders. Future plans for the lab include recruiting AI-skilled employees and fostering interdepartmental collaboration. Optimal Blue CEO Joe Tyrrell noted that the company has already deployed over a dozen AI products and intends to leverage AI Labs to accelerate the development of more applications. The company is also exploring "ontological AI" to enhance large language models with contextual relationships across data, potentially supporting applications in mortgage pricing, hedging, trading, and workflow automation.
