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The co-founder of an up-and-coming mortgage lender that launched what it claims is the world’s first AI mortgage chatbot this week, says he’s not fazed by news that broke the same day: That federal regulators are investigating the maker of ChatGPT for potential violations of consumer protection law.
Formed in 2018, Providence, Rhode Island-based Beeline Loans Inc. is licensed in 28 states and Washington, D.C., sponsoring 20 mortgage loan originators who work out of four branch locations, according to the Nationwide Multistate Licensing System.
On Thursday, the company put out a press release announcing the launch of Bob, “the first-ever AI mortgage chatbot” that it characterized as the first step in a “much larger AI road map.”
“Beeline’s custom machine learning models, natural language processing and the Beeline Brain — a vast human curated vector knowledge database of real customer chats, product-specific data and structured internal knowledge documents,” the company boasted in the announcement. “The Brain allows the LLM [large language model] to instantly respond to almost any Beeline-related question through a conversational interface — with Beeline’s signature twist of irreverence and playfulness.”
But Beeline announced Bob on the same day that the Washington Post broke a story — since confirmed by CNN and other news organizations — that earlier this week the Federal Trade Commission hit ChatGPT creator OpenAI with a 20-page investigative demand.
The FTC reportedly wants insights into how OpenAI develops its algorithms and what steps it’s taken to address cases where the company’s apps have been found to generate false information.
(In a tweet, OpenAI CEO Sam Altman said it was “very disappointing to see the FTC’s request start with a leak,” but the company is confident it follows the law and promised “of course we will work with the FTC.”)
Beeline co-founder and CEO Nick Liuzza told Inman that the FTC probe is not a cause for alarm, as ChatGPT is only one “extremely slim” component of Bob, and that the company’s in-house product team has been working for months to make sure the AI chatbot is in compliance with laws governing mortgage lenders.
Nick Liuzza
“We were working on the compliance side of this four months ago, in February,” Liuzza said. “We fully expected these sorts of conversations to come up and you know, we’re not throwing spaghetti at the wall here.”
In its announcement, Beeline describes Bob as “not a single AI but an AI orchestration system that ties together several AIs, with each specifically trained to do one task very efficiently to create one natural, rich experience.”
Liuzza said “we don’t give away our secret sauce on how we’re doing things,” but shared that Bob was built “100 percent inside of our company” by a product team based in Australia.
From a big-picture standpoint, Liuzza said he’s confident that Beeline’s mortgage clients won’t be led astray, because Bob is programmed not to answer questions that pertain to the specifics of their loan application or which should only be answered by a licensed loan officer.
“Bob knows what is licensed activity and what’s not licensed activity,” Liuzza said. “If any question that pops up is specifically related to (a customer’s) file or information, now you’re starting to get into a situation where you’re providing mortgage advice,” he said. Bob “is not going to answer those questions.”
If there’s any chance of a compliance issue, “then we automatically kick the conversation over to a person who is on staff, or if it’s after hours we set up an appointment to speak to them later.”
So what is Bob good for?
“The whole objective of Bob is to not replace conversations that consumers have to have with licensed loan officers,” Liuzza said. “The objective is to provide real-time information that’s not considered licensed activity.”
Liuzza said one of the lessons the company learned after launching its proprietary platform in June of 2020 is that as interest rates soared, it was clear that Beeline needed to offer more than just conventional mortgages that meet Fannie Mae and Freddie Mac’s guidelines.
Today, Beeline offers a broad range of mortgage products for homebuyers, existing homeowners and investors. In addition to the usual conventional, FHA and VA loans offered by many lenders, Beeline can provide debt service coverage ratio (DSCR), bank statement, bridge and fix-n-flip loans that are popular with investors and self-employed borrowers.
Bob can help borrowers get a feel for their options, including “non-QM” (non-Qualified Mortgage) loans not eligible for purchase by Fannie and Freddie, Liuzza said.
“Beeline is one of the few direct-to-consumer lenders, where a consumer can come to our platform and AI inside of that platform will drive the consumer to a conforming or non-conforming mortgage based on how the questions are answered,” Liuzza said.
Screenshot of a query submitted by Inman to Beeline’s AI mortgage chatbot, Bob, and Bob’s response.
Consumers who query Bob on the company’s website (through a dedicated search box rather than the website’s chat tool) are warned that the information it provides “is not intended as financial advice, may be inaccurate and does not constitute a credit decision or commitment to lend.”
OpenAI’s documentation brags that the company’s application program interface (API) “can be applied to virtually any task that requires understanding or generating natural language and code.” But in a “safety best practices” section, the company warns of some of the pitfalls developers may encounter.
“From hallucinating inaccurate information, to offensive outputs, to bias, and much more, language models may not be suitable for every use case without significant modifications,” OpenAI cautions. “Consider whether the model is fit for your purpose, and evaluate the performance of the API on a wide range of potential inputs in order to identify cases where the API’s performance might drop.
“Consider your customer base and the range of inputs that they will be using, and ensure their expectations are calibrated appropriately.”
Liuzza said Beeline released Bob only after “we were comfortable with whether or not it was compliant. We’ve been training this thing as we built it, and it’s only going to get better and better and better.”
Bob helps Beeline’s human loan originators, which the company calls loan guides, get up to speed on what clients are looking for.
When Bob hands off a consumer to a loan guide, “that entire conversation is recorded in our system. It’s pushed over to our CRM so we have a record of exactly what happened, and so the loan guide is basically reading that conversation,” Liuzza said. “We’re not getting rid of loan guides in our model — in fact we’re hiring right now.”
Beeline is the “doing business name” of Beeline Loans Inc., a subsidiary of Beeline Financial Holdings Inc.
Previously known as Rabbit Mortgage, Beeline announced a Series A funding round in 2021 that brought the total raised by the company at that time to $22 million.
Beeline says its streamlined process allows it to offer lower interest rates and closing costs. With the borrower’s consent, Beeline’s automation platform accesses their bank, income and tax information online, and verifies the numbers before processing and resolving underwriting conditions to provide decisions in real time.
Beeline recently partnered with Vesta, a mortgage loan origination software company founded in 2020 by former Blend employees Mike Yu and Devon Yang.
Collaborating with Vesta “will empower Beeline to streamline the origination of their diverse loan offerings, significantly enhancing the borrower experience,” the companies said in announcing the partnership in June.
Beeline also provides leads to Realtors, promising its “purchase-ready approvals” are more reliable and accurate than traditional pre-approvals that depend on information provided by borrowers.
Beeline provides title agency and escrow services in some markets through Beeline Title LLC, Beeline Settlement Services LLC, Beeline Texas Title LLC and Beeline Title Agency LLC. Beeline Title provides policies underwritten by WFG National Title Insurance Company, Westcor Land Title Insurance Co., Stewart Title Co. and First American Title Insurance Co.
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