Data has become an integral part of businesses operated nowadays. Therefore, we shouldn’t underestimate its power now, when most businesses have been affected by the pandemic and every resource matters. In the mortgage industry, data can be of much help. But is it enough?
Kenon Chen from Clear Capital mentions the importance of incorporating big data, machine learning, analytics, and artificial intelligence (AI) in the mortgage industry. He claims that these resources can help all parties, facilitating the process of buying, renting, or valuing the property.
In this episode of Identity Revolution, you will get the chance to meet our guest, Kenon Chen. He will lead you through Clear Capital’s goals, focusing on the importance of using different information sources to beat the bias and other common problems that frequently arise in the mortgage industry.
- Name: Kenon Chen
- What he does: Kenon is an Executive Vice President of Clear Capital. He also has a rich background in the tech and web development industry, and he worked as a Programming Manager at JD Stewart & Associates for three years. He is also a creator of many .com websites and web apps.
- Company: Clear Capital
- Key Quote: “Do the most you can with what you’ve been given now.”
- Where to find Kenon: LinkedIn | clearcapital.com
- Success lies in stitching things together. Kenon’s rich background in the technology field has had a significant impact on his overall business success. “I think a lot of my journey has been searching for ways to add real value. Technology is a tool to do that, but that drove me into the product, embracing data science and analytics and the power of what that brings. Stitching that all together with an understanding of industry relationships and how things affect people – I think that’s what led me to the diverse role I have now.”
- The use of AI and machine learning in the mortgage space is one of the top trends from a technology standpoint. Incorporating big data, AI, and machine learning could significantly help the mortgage industry, claims Kenon. “We use the automated valuation model, which is an alternative to a human appraiser going out and putting a value on a home. We’re using machine learning to predict the value of a home by connecting to big data and a number of different sources.” Implementing these resources is of the utmost importance now that the entire market has gone digital due to the pandemic.
- Technology and conversation are a way to remove bias from the system. Bias isn’t new to the housing market, but “we can assure that there’s fairness in the system. […] We use machine learning and automated valuation because the computer models don’t have the same sort of bias built-in as humans. So, it’s a really interesting dialogue going on right now to see how we can rely on these other methods to improve the accuracy and consistency of home valuation.”
COVID “Digitalized” the Mortgage Industry
“One of the first things that happened with COVID is the need to socially distance, […] and you don’t want to let a stranger into your home. And appraisers also don’t want to go into the homes of strangers. One of the things that we did was quickly figure out how we still enable data collection to happen at that property without people being in the same room. So, we built a web app that allows the homeowner to provide data on their home seamlessly to the appraiser and other organizations.”
The Future of the Housing Market: Are We at Risk of Inflation?
“The housing supply is still far behind demand. So, I think we’re looking at a number of years in which the inventory is not going to grow in a way that would impact the strength of home prices. […] Due to COVID and with an unfortunate number of folks out of work, there’s a number of loans that are in default or forbearance. […] But if it’s just about supply and demand, it really looks like we’re not in an inflated bubble.”
Machine Learning and AI in the Mortgage Industry
“The use of AI and machine learning in the mortgage space is certainly one of the top trends from a technology standpoint. […] This is something that could really help the industry from our standpoint for valuation.”
Education and Technology are a Key to Overcoming Racial Bias in the Housing Market
“It’s interesting that right now, there’s a conversation about whether there is racial bias in the housing process or the appraisal process. Could a potential solution for either unconscious bias or even explicit bias be by introducing other methods of providing some checks and balances?”
“If I’m going to talk about how we’re impacting things like bias and thinking about the housing market and how we can assure that there’s fairness in the system, I just needed to make sure I’m educated on how we got to where we are. Why is the housing market the way it is? Why do some neighborhoods perform very differently when it comes to evaluation?”
Companies Need to Know Where Data is Coming From
“I think there’s a need not only for more accurate data and more complete data sets but also, I think there’s a growing conversation around the rights to use that data and how that data was collected. Is it ethically sourced so that the models that are relying on it can be trusted, can be verified, and, ultimately, be used widespread? I think there are a lot of capabilities being created for even better analytics. But it gets back to where did the data come from?”
Where Could We Expect an Increase in Property Value?
”I was seeing the greatest number of relocations being poured into Austin. Texas is going through a pretty difficult time right now with the weather and power. But the growth rate of Austin and Dallas is pretty incredible. With their friendliness to business, I think that’s going to continue. So, yeah, I would pick two cities in Texas as a pretty good bet.”
[2:36] “I think a lot of my journey has been searching for ways to add real value.”
[11:55] “I’m very excited right now on the intersection of social awareness and putting people first.”
[12:19] “There’s more at stake here than just building things because we can. There’s now a question of building things because we should.”
[13:03] “It is an enormous responsibility, but also a super worthwhile challenge to do things that actually improve lives.”
[19:11] “Don’t despise small beginnings. Whatever opportunities you have, although they might not be the ones you would have chosen, if you really make the most of it, try to add value and make an impact – It always leads to better things.”