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Mortgage technology company Staircase has released an automation solution called ChatMTG that promises to shrink the lending process for a new home, Inman learned in a Feb. 10 press release.
The company flattens the tedious process of applying for a mortgage, making it digital and populating required information from a user’s uploaded financial documents. According to the company, the faster application process can reduce a mortgage rate, on average, by 1.25 percent and the monthly payment by 13 percent. “Over the 10-year life of a loan, this adds up to a total mortgage cost savings of $56,000 or a whopping 67 percent,” the press release stated.
ChatMTG can produce a rate for the consumer in less than a minute and the entire application for both new and refinanced mortgages can be completed in 10 minutes or less, the company says. The product name is clearly capitalizing on the popularity of ChatGPT, a consumer-level artificial intelligence model built by OpenAI.
“For the average American, ChatMTG creates savings which are the equivalent of a full year of after-tax income,” said Adam Kalamchi, CEO and founder of Staircase, in a statement. “Interest rates are not the product of a competitive market, but rather the accumulation of inefficiencies and hidden fees that are disguised by claims of ‘no fees!’ which really means ‘no visible fees’. With ChatMTG, we are working towards saving every American time and money.”
Staircase states that more than 6.3 million homeowners are eligible to refinance using its software, which initiates its process by its AI interface collecting answers to a few personal questions from the buyer or owner, such as how long they plan to stay in the home, employer information, additional income streams and family information.
No hard credit pull is required to produce a rate estimate, only the potential home’s address, price and a person’s down payment amount. Document uploading, such as pay stubs, tax forms and bank statements, does a pose a risk when juxtaposed with more sophisticated forms of consumer-permissioned workflows from fintech apps, such as AsterKey, which communicate directly with banks and other sources of financial data to collect only whats needed and authorized by the user.
“ChatMTG extracts the data and asks questions to fill in any remaining gaps, just like a human loan officer would do, but instantaneously and flawlessly, without the risk of human error,” the release stated.
Staircase applies a more modern, tech-enabled approach to cure the legacy lending milieu of its old-school stigma that suggests it profits off of inefficiency. In 2022, it launched an automated insurance underwriting product, promising to private mortgage insurers that it can “slash costs in half.”
Banking trade publication, BankingDive, published the results of a 2023 J.D. Power study that stated customer satisfaction with lighter-weight, consumer-first fintech companies is higher than it is with traditional lending brands. Specifically, “83 percent of customers said they never faced any problem with their loans compared with 74 percent of non-fintech borrowers,” the report found.
Bruce Gehrke, senior director of wealth and lending intelligence at J.D. Power, said in the BankingDrive report that alternative technologies do a better job of relating to their emerging customer base.
“[The fintechs] are very, very focused on customer relationships, and that is becoming a driving force,” he said. “I don’t think the banking industry has ever not paid attention to [customer service], but I think the way the fintechs think about it is a little bit different and I think they are going to continue to press that as a competitive advantage. I think they believe that; they believe in what they are doing.”
Founded in 2020 by Kalamchi and Soofi Safavi, Staircase received an $18 million Series A funding round in December 2021 led by Bessemer Ventures. Its total raised to date is $24 million, TechCrunch reported.
