Mortgage’s AI Reckoning Is Here

My friend works as a senior engineer at Meta. For much of his tenure, Meta was all about the engineers. They were the stars, the people Zuck showed reverence to. 

Not anymore: “AI is already so good that my job is going to be gone very soon,” he said. “Everyone in tech knows it.” 

The existing workforce is literally being trained to hand their jobs to AI: Engineers are heavily monitored & every problem is thrown into Claude, etc. in the brutal quest for efficiency. The junior engineers were the first casualties but the senior engineers will soon be cut too. It’s just a matter of time. So he’s adapting — during off-hours he’s building a stock trading program & creating kids video games — but no longer sees a future in tech for himself.

Unlike tech, the mortgage industry’s workforce has long been defined by brute-force market economics: When business is good, executives scale up & hire to meet the demand. When it’s flat or demand falls, they’re upside down & lay people off.

Newrez’s earnings call this week suggests that AI is already so compelling that automation is here & mortgage executives are now saying the “quiet part” out loud, according to Paul Hindman.

Hindman’s post is both provocative & thoughtful: Essentially, what is humanity’s place in the mortgage industry as AI improves & the business case to eliminate jobs grows?

Here’s what he wrote:

For years, mortgage execs have hidden behind phrases like ‘streamlining’ and ‘right-sizing,’ But Spencer [Lee’s] reporting on Newrez & Rithm Capital just sized up the reality of right now. Their leadership isn't just adjusting for a bad quarter; they are fundamentally admitting that the human-centric model of lending is being treated as a legacy cost.

Here is what nobody else has the nerve to say about that article: Is this an ‘investment’ in tech, or an outright divorce from the traditional mortgage lending workforce?

I just have to wonder... when Baron Silverstein and Michael Nierenberg talk about a 15% reduction in their current run rate via AI partnerships with Valon and HomeVision, are they issuing a death warrant for middle-management and back-office redundancy?

And are they really going to tell their employees: ‘We’ve found a way to grow without you.’

While other companies are still trying to figure out if AI can write a better email, Newrez is integrating it everywhere and when fully executed, perhaps it will ensure that once a human is gone, they never have to come back.

…Newrez “is prioritizing profit margins over the very human infrastructure that built the company. They are betting that the consumer won't care if a machine or a human validates their home value, as long as it's cheaper. They are effectively pioneering an AI driven model for mortgages, where the brand is visible, but the people who make it work are invisible, automated, and ultimately, optional.

So, does this move finally mark the end of the ‘Human Era’ of lending and the start of the ‘Efficiency Era,’ and has Newrez just stepped up to be the AI mortgage lending executioner when it comes to replacing people with tech?

If ‘operational discipline’ is just a polite way of saying "automated displacement," how long before the very talent you’re trying to recruit realizes they aren't joining a team, but are actually just babysitting the machine that will very soon replace them?”

Plenty of industry execs say AI isn’t going to wipe out the workforce, that humans will wield these tools & just be better at their jobs than they currently are. I don’t buy it. What do you think? Share your thoughts w/ me at [email protected]. 

That was heavy — hopefully I haven’t totally bummed you out! In today’s edition, I’ve got some scoops & fun stuff about who is already turning on VantageScore, the restructuring at Dark Matter Technologies, which massive investment firm is quietly backing NFTY Door & more.

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The headlines from last week were that home equity platform NFTYDoor had gone independent & that Homebridge Financial Services was being acquired by an affiliate of SaludaGrade. It’s a bit more complicated than that. Flowchart fiends, assemble!