AI, Construction, Servicing, QC Products; NY Conference Chatter; AI Governance; LO Comp

One of the discussion topics here in New York at the MBA conference is, just like every other conference, artificial intelligence, and one of the questions is, “Who’s accountable if something goes wrong?” Any one of us in capital markets will tell you that, in the case of Freddie, Fannie, investors, and so on, lenders are held ultimately accountable for anything that goes wrong. In the event of a buyback, or default, a lender can’t point at an AI vendor and say, “You cover the losses.” Make sure that with any software that you buy you know where it came from and how it was designed, and ask lots of “what if” questions. Sprinkling some AI fairy dust over some legacy technology that is years old can cause serious issues. (Today’s podcast can be found here and this week’s ‘casts are sponsored by TransUnion. Discover how data-driven mortgage intelligence is helping lenders identify in-market borrowers, strengthen portfolio performance, personalize outreach, retain customers, and drive smarter growth in an increasingly competitive housing market. Today’s has an interview with Acrisure’s Kristen Britton on how lenders are balancing speed, automation, fraud prevention, and human oversight as remote closings reshape mortgage risk, identity verification, and the future framework of trust in digital transactions.)

Lender and Broker Products, Software, and Services

The ICE 2026 Borrower Insights Survey shows a 10 percent year-over-year drop in borrowers who say they are definitely satisfied with communication with their mortgage servicer. Pair that with the survey finding that 96 percent of borrowers say personalized communications remain important to them. These findings suggest servicers need tools that go beyond basic payment processing and to deliver relevant, timely outreach that satisfies borrowers and supports retention. ICE Servicing Digital offers the communication tools to help turn transactional relationships into lasting ones, including surfacing personalized refinance scenarios, current rates and tappable equity alerts directly to borrowers. Read the blog for more insights into borrower communication preferences and how to strengthen borrower relationships.

“In subservicing, plenty of subservicers talk about performance. Very few are willing to show it. At Servbank, we take a different approach. We believe transparency starts with real numbers, not promises or marketing language. That’s why we’ve launched our new Subservicing Stats page, where our servicing performance is published publicly for anyone to see. No spin. No storytelling. Just real data, real results, and real accountability. Because when you believe in the work you do, you don’t hide it, you put it on display. View the stats and read the story here.”

Mortgage fraud continues to be a hot topic in the industry and it’s imperative to stay up to date with the latest trends. On June 3 at 10am PT, join experts from Cotality and ACES Quality Management at the Cotality Fraud Summit, a must-attend virtual event designed for mortgage lenders, servicers and risk professionals who need practical strategies to detect, prevent, and respond to evolving fraud threats. From synthetic identity and income manipulation to emerging AI-driven schemes, today’s risk landscape is more complex and costly than ever. The Cotality Fraud Summit brings together experts across data, analytics, and operations to share real-world insights, actionable best practices and technology-driven solutions that help you stay ahead of risk without slowing down your pipeline. Attendees will gain perspective on fraud and compliance best practices, and how advanced data and intelligence can strengthen decisioning across the loan lifecycle. If protecting margins, preserving borrower trust and safeguarding your organization are priorities in 2026, this event belongs on your calendar. Register here.

CIC Credit is helping lenders navigate the fast-moving spring homebuying season with smarter, more confident credit decisions. As borrower activity ramps up in May, speed, accuracy, and flexibility matter more than ever. According to the ServiceLink 2026 State of Homebuying Report, 43 percent of loan officers said borrowers expect to close within two weeks or less, while faster approvals and response times remain top borrower demands. At the same time, affordability concerns and evolving borrower profiles continue to challenge underwriting teams. CIC Credit gives lenders access to multiple bureau and data source options so they can compare, combine, and choose the right data source for every loan scenario without changing platforms. The result: streamlined workflows, faster decisions, and greater confidence during one of the busiest lending seasons of the year. Right Data. Right Source. Smarter Credit Decisions. Connect with CIC Credit at sales@ciccredit.com.

Less back-and-forth. More first-time-right verifications. Truework replaces manual verification waterfalls with a single automated platform, so underwriters, LOs, and ops can cut down the document chasing, conflicting numbers, and last-minute corrections. Lenders see up to 50 percent cost savings on verifications, with faster turn times, higher accuracy, and stronger R&W relief. Trusted by top lenders in the U.S., Truework gives your team verification results they can rely on. Learn more.

Execution of government loans that fall outside standard investor channels shouldn’t be the bottleneck in your secondary strategy. The right scratch and dent partner brings product depth, consistent execution and an investor network that opens doors, not one that limits them. The Click n’ Close Whole Loan Trading division delivers across FHA, VA, USDA, One-Time Close construction, and Section 184, supported by direct relationships with Ginnie Mae and a network of private investors. To accelerate the growth of the division, Click n’ Close has engaged Christy Soukhamneut and Launch Point Advisory Group. Soukhamneut brings nearly three decades of leadership in correspondent lending and secondary market strategy. If you’re rethinking your execution partners, it’s worth a closer look. Connect with Christy Soukhamneut or your Click n’ Close Correspondent Account Executive.

If it’s so smart, why doesn’t AI give the same answer every time? LoanCraft recently submitted the same credit file to identical AI models and got three completely different results. In its series in "The Art of Lending," LoanCraft considers the dramatic change that AI brings to lenders due to this non-deterministic nature. Unlike traditional software that guarantees identical outputs for the same inputs 100 percent of the time, AI results vary. To manage this risk, lenders must define acceptable boundaries of inconsistency while strictly prohibiting systematic bias, data drift, and adversarial manipulation. Lenders must invest in continuous, high-volume testing tools (like Monte Carlo simulations and automated "Challenger" models) and testing will become a bigger expense than developing. Ultimately, lenders can capture immense efficiencies from AI if they maintain strict acceptance standards and commit to rigorous testing. For this helpful and thought-provoking analysis on AI's algorithmic consistency, visit The Art of Lending.

Your pipeline isn't the problem. Your visibility is. Sales leaders are accountable for numbers they can't always see. Leads come in from multiple sources, originators work them inconsistently, and by the time you spot a bottleneck, the opportunity is already gone. Last week, Total Expert announced enhanced Lead Management capabilities, which give users full pipeline visibility, intelligent routing, and automated follow-up. When teams can execute consistently, you don’t have to spend time chasing down updates. See exactly where leads are, who's working them, and where deals have stalled. Then fix it before it costs you. "Our teams know who to contact, when to act, and how to move leads forward without guessing, all from a single view." said Alec Picinich, Marketing Manager at USA Mortgage. Stop letting leads gather dust.

The Chrisman Marketplace is a centralized hub for vendors and service providers across the mortgage industry to be viewed by lenders in a very cost-effective manner. We’re adding new providers daily, so check back often to see what’s new. To reserve your place or learn more, contact us at info@chrismancommentary.com.

Live From New York City!

The roasting temperatures here in Manhattan aside, put a thousand mortgage folks in one place, and stuff happens, and not only in capital markets developments.

Today on Mortgage Law Today at 2PM ET, powered by Polunsky Beitel Green, Brian Levy, Loretta Salzano, and Marty Green are joined by Monika McCarthy and Tela Mathias to discuss the legal and compliance realities of AI in mortgage. The conversation explores governance, vendor oversight, consumer data usage, and evolving regulatory expectations.

And on tomorrow’s Credit Committee at 3PM ET, powered by Equifax, host Rob Chrisman will be joined by representatives from each of the national credit reporting agencies for a discussion on the unintended risks of mortgage credit cost-cutting initiatives, examining how tri-merge data, credit scoring models, cybersecurity investments, regulatory pressures, and evolving bureau practices impact consumer access, lender repurchase risk, loan quality, and the long-term stability of the secondary mortgage market.

While lenders and clients are faced with higher rates due to war and oil prices, on a large scale, improved affordability continues to be the keystone in many of the changes we can expect to see in our biz. Fortunately, our MBA is at the heart of many of the initiatives and correcting erroneous information. For example, the median first-time homebuyer is still between 32 and 34 years old, basically unchanged for more than a decade.

The President issued a pair of executive orders in March to promote affordability in the housing market, including “ordering” federal agencies to issue new rules that lower costs and increase access to mortgage credit. MBA CEO Bob Broeksmit states, “A lot of burdensome regulations need to change. Especially the ones that increase costs without providing much benefit or protection to Americans.

“An obvious example is the Loan Officer Compensation Rule. It prevents lenders from offering better terms to potential customers who are shopping for the most competitive offer. That’s an easy way to lower costs, yet it’s illegal. There’s also the Qualified Mortgage Rule. While it’s very effective and well-crafted overall, it still needs targeted changes so lenders can offer streamlined refinances on Fannie and Freddie loans. And then there are certain TRID requirements, which have huge compliance costs for no good reason.”

What MLOs Should Know About AI

I’ve spent some time here in Manhattan with Brian Vieaux, President of MISMO, who recently sent a note with an AI warning. “Artificial intelligence is no longer a future discussion for the mortgage industry. It is already embedded throughout the mortgage process. Mortgage companies of all sizes utilize AI-enabled tools for document review, borrower communication, fraud detection, quality control, marketing, servicing workflows, and employee productivity. In many cases, lenders are not intentionally ‘buying AI.’ They are inheriting it through the platforms and systems they already use every day.

“For the industry’s largest institutions, building internal AI governance structures may be manageable. For many independent mortgage banks, community lenders, and mortgage brokerages, it is a much greater challenge. Most smaller organizations do not have dedicated AI governance teams, model risk management groups, or large compliance staffs focused solely on emerging technologies.

“That gap is exactly why the Mortgage Bankers Association’s Residential Board of Governors (RESBOG) identified the development of an industry AI governance framework as one of its top priorities for 2026. In partnership with RESBOG, a dedicated group within MISMO’s AI Community of Practice has spent the past several months developing MISMO FRAME (Framework for Responsible AI in Mortgage Ecosystem). FRAME is designed to provide mortgage companies with a practical toolkit for governing the responsible use of AI.

“FRAME does not create new regulations. Existing laws and regulations already apply to AI systems. Instead, it is intended to help lenders operationalize those obligations through practical implementation guidance tailored specifically for mortgage companies. FRAME will include implementation tools such as AI system inventories, governance policy templates, vendor risk assessment guidance, AI system risk assessments, and generative AI governance considerations.

“One of the most important aspects of this effort is vendor oversight. Most mortgage companies are not building AI systems internally. They are relying on AI-enabled capabilities embedded within loan origination systems, CRM platforms, servicing technologies, and other third-party tools. Even if a lender does not own the model, the lender still owns the outcome. FRAME will be discussed during MISMO’s Spring Summit in Louisville, Kentucky, June 1–4, before broader availability to MISMO member companies later this summer. Anyone interested in learning more about MISMO FRAME can contact me directly at bvieaux@mba.org.” Thank you, Brian.

Capital Markets

Oil at $111 a barrel? Yup. In addition, the markets continue to grapple with uncertainty following the U.S.-China summit, where the primary unresolved issues remain global energy supply disruptions and Taiwan. While no immediate breakthroughs were expected, the lack of clarity leaves investors focused on inflationary pressures tied to energy costs and whether consumers can continue absorbing higher gasoline prices as the summer driving season begins (maybe it won’t materialize, similar to the spring home buying season…).

Want some good news? Agency adjustable-rate mortgage (ARM) issuance is on pace to reach its highest level in more than a decade in 2026, driven primarily by a steepening Treasury yield curve, persistent inflation concerns, and rising long-term interest rates that are making fixed-rate mortgages less attractive. Although overall Agency MBS supply is expected to remain roughly stable, ARM issuance could more than double from last year as lenders and borrowers increasingly gravitate toward products with lower initial rates, particularly among high-credit-quality borrowers who now dominate the ARM market following stricter post-2008 underwriting standards.

Unlike the pre-financial-crisis era, today’s ARMs are tied to SOFR rather than LIBOR, reprice more frequently, and require borrowers to qualify at fully indexed rates, making the product structurally safer but still highly sensitive to the shape of the yield curve. The outlook for ARM growth ultimately hinges on whether inflation, fiscal deficits, and geopolitical pressures continue pushing long-term yields higher even as the Federal Reserve remains constrained on short-term rates, a dynamic that has already produced a significant bear steepening in the Treasury curve and could further increase demand for adjustable-rate financing in the years ahead.

Just how durable is the recent bond selloff? It's a good question, as the reality of higher rates is settling in with lenders. While higher yields are beginning to look increasingly attractive to sidelined bond investors (but not sidelined home buyers), there isn’t really a near-term catalyst for a sustained reversal, particularly as concerns surrounding oil supply disruptions and volatile geopolitical headlines continue to overshadow traditional fundamentals. Yield curve steepening has accelerated, and any further breakout could trigger broader repricing across risk assets. Investors increasingly expect a period of consolidation in rates, with markets balancing signs of economic resilience against growing consumer pressure from sustained high gasoline prices and ongoing uncertainty surrounding global trade and geopolitical negotiations.

Today’s economic calendar kicked off with ADP Employment (for the four weeks ending May 2, U.S. private employers added an average of 42,250 jobs per week). Later today brings Redbook same store sales, April Pending Home Sales, and Fed “speak” from members Waller, Paulson, and Venable. We begin Tuesday with Agency MBS prices unchanged from Monday’s close, the 2-year yielding 4.08, and the 10-year yielding 4.62 after closing yesterday at 4.62 percent.