As Artificial Intelligence (AI) technology adoption by the mortgage lending industry and other financial services providers expands, regulators are worrying about potential consequences. So much so that federal Reserve Governor Lael Brainard recently said regulators are seeking to “understand the potential benefits and risks” from utilizing artificial intelligence in the financial services sector and considering what actions they should take to address related risks.

Federal Reserve Governor Lael Brainard

The Fed and other banking regulators are considering a formal request for public feedback about the adoption of AI in the financial services sector, Brainard said. If the Fed decides to issue such request for information (RFI), according to various media reports, the move could be the first step toward an interagency policy on AI.

For example, Brainard said the RFI would accompany the Fed’s own efforts to explore how AI and machine learning, as the central bank considers ways how it can be used to supervise banks.  

“To ensure that society benefits from the application of AI to financial services, we must understand the potential benefits and risks, and make clear our expectations for how the risks can be managed effectively by banks. Regulators must provide appropriate expectations and adjust those expectations as the use of AI in financial services and our understanding of its potential and risks evolve,” Brainard said in remarks for a Fed hosted symposium on AI.

Financial institutions are using AI for operational risk management and for customer-facing applications and fraud prevention, Brainard said.

“Machine learning-based fraud detection tools have the potential to parse through troves of data — both structured and unstructured — to identify suspicious activity with greater accuracy and speed, and potentially enable firms to respond in real time,” she said. AI also could be used to analyze alternative data for customers, Brainard said, adding that such efforts “could be particularly helpful to the segment of the population that is “credit invisible.”

Meanwhile, mortgage fintechs report on tech adoption, business achievements, continued growth, outlooks for 2021 and leadership news.

  • Knock names Michelle DeBella as CFO
  • ServiceLink welcomes Chris Cunningham
  • Cloudvirga accelerates growth
  • Brace scores $15.7M in Series B, plans expansion 

Knock names Lyft VP, finance Michelle DeBella as CFO

Former Lyft, Uber and Hewlett Packard (HP), finance executive Michelle DeBella has joined Knock as chief financial officer, reporting to Knock’s co-founder and CEO Sean Black.

Michelle DeBella, Knock CFO

DeBella will drive operational rigor and help the company accelerate growth of the Knock Home Swap, which allows consumers to buy before they sell their home, the fintech said in a press release.

“Michelle’s leadership experience helping two hyper-growth, iconic tech companies go public” makes her uniquely qualified to join Knock at a critical inflection point in its five-year history, said Black. “We are extremely fortunate, that Michelle has chosen to bring her experience to Knock.”

DeBella brings more than 25 years of experience and a diverse background in finance strategy, operations and management at disruptive technology companies.

Most recently, she served as vice president of finance transformation and governance at Lyft. Before joining Lyft in 2019, DeBella was the global head of internal audit at Uber. During her time at both Lyft and Uber, she scaled their finance organizations in preparation for their successful IPOs.

Previously, she spent more than eight years at HP. DeBella joined HP in 2009 as VP enterprise financial reporting, was promoted to VP internal audit in 2011 when she supervised elements of HP’s 2015 split into HP Inc. and Hewlett Packard Enterprise. Earlier she spent nearly 17 years at Ernst & Young LLP.

The National Diversity Council named DeBella one of the 50 Most Powerful Women in Technology in 2019. A certified public accountant, she earned her bachelor’s and master’s degrees in accounting at Truman State University. “Although they are in different industries, Knock, Lyft and Uber all have the shared mission of helping people move freely,” said DeBella, similarly, “Knock is fundamentally improving the everyday experience of buying and selling a home.”

Chris Cunningham, national sales executive, valuation and title services at ServiceLink

Home lending fintech ServiceLink has hired industry veteran Chris Cunningham as national sales executive, valuation and title services.

Based in Orange County, California, he is responsible for driving a client growth strategy for originations products.

Cunningham brings more than 20 years of experience in sales and business development in the valuation and title insurance industries, along with expertise rooted in consultative selling of mortgage lending technology solutions to mortgage lenders, banks and credit unions.

Prior to joining ServiceLink, Cunningham served as VP of business development at ValueLink Software, an end-to-end valuation management, automation platform.

He has worked for various organizations that include Mercury Network, LLC, Platinum Data, Corelogic and Altisource.

Cloudvirga accelerates growth

Mortgage lending fintech Cloudvirga reported it doubled revenues in 2020 primarily driven by a 300% increase in the application volume powered by its advanced digital lending platform for lenders and consumers. Following a strong 2020 performance, the Irvine, California-based company expects continued growth acceleration in 2021 as well.

Currently Cloudvirga’s technology used by 10 of the country’s top 40 mortgage originators, according to the company website powers nearly $100 billion in loans annually.  

The reported annual growth in 2020 also benefited from the addition of new retail and wholesale clients in the second half of 2020. The fintech said it added two new wholesale lenders in the fourth quarter and four new retail lenders, two of which generate more than $600 million in monthly mortgage loan volume. 

In addition, the company completed previously announced integrations with lending clients Finance of America and Citizens Bank.

In step with these milestones, Cloudvirga expects both of its advanced functionality and productivity retail and wholesale lending platforms will continue to drive growth for 2021.

Cloudvirga’s platform experienced phenomenal growth, in 2020, said Kyle Kamrooz, co-founder of Cloudvirga. “Our retail digital point-of-sale (POS) platform enabled our clients to work remotely and, at the same time, set new records for originations while empowering loan officers,” and leading to the triple growth in application volume.

She credited the midyear launch of the new Cloudvirga third party originator, or TPO platform for the success. The Cloudvigra TPO platform for large wholesale lenders changes how they work and collaborate with their broker partners by automating a lender’s wholesale origination workflow, she explained, and provides private-label POS for each of the lender’s brokers.

Brokers use their own POS to compare products and pricing, upload or create loan files, run dual AUS, prepare disclosures, order products and submit underwriter-ready loan packages—all in less than 10 minutes, she said. Wholesale lenders are realizing “technology has to be at the core of any growth strategy to compete in the rapidly growing wholesale channel.” 

In 2021, same as in 2020, Kamrooz expects to see low interest rates, more lenders diversifying into other channels, and accelerated competition in the TPO space.

Brace scores $15.7M in Series B, plans expansion

Brace, a mortgage servicing fintech powered by artificial intelligence (AI) technology, has received $15.7 million in Series B funding from a group of investors led by Canvas Ventures – a first time investor in the company.

Returning investors who also participated in this funding round, include CrossLink Capital and Point72 Ventures, founded by Steve Cohen, a billionaire and majority owner of the New York Mets.

The new round closed roughly 10 months after Brace raised its Series A, bringing Brace’s total raised so far to more than $30 million.

The company also announced Canvas general partner Rebecca Lynn has joined Brace as a board member. “Lynn brings more than 20 years of fintech operating and investing experience and we look forward to partnering with her,” said Eric Rachmel, CEO of Brace.

Brace’s platform enables mortgage servicers to reduce loss mitigation and loan workout costs while staying in compliance with delinquent borrower servicing requirements. The company is developing a full suite of digital solutions that streamline and automate distressed loan servicing via AI powered data submissions and decisioning.

“An enormous amount of value is locked inside legacy core systems, and in this past year the COVID-19 crisis has been a catalyst for speeding up innovation in servicing,” said Rachmel. “The funding will be used to further build out the automation Brace provides for distressed loan servicing and to expand into related services… We’re working with smaller customers to the largest institutions in the country.”

A rise in unemployment driven by the pandemic has increased the volume of distressed loans in the market over the course of the past year, and mortgage company interest in managing the process has grown as a result, he added.

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