By Patrick Hruby, Esq.

Brock & Scott, PLLC *

USFN Member (AL, CT, DC, FL, GA, KY, MA, MD, ME, MI, NC, NH, NJ, OH, PA, RI, SC, TN, VA, VT, WV)

On September 25, USFN hosted a webinar exploring how technology is reshaping the default mortgage servicing landscape. USFNgage: Tech-Driven Transformation: Innovations in the Default Mortgage Industry highlighted how artificial intelligence (“AI”), automation, cybersecurity, and workflow platforms are transforming compliance, operations, and borrower engagement across the industry.

The discussion was moderated by Ben Paden of Doyle & Fouty, P.C., and featured a panel of distinguished industry leaders: Amy Neumann, CMG Financial Inc.; Mike Merritt, BOK Financial; Brian Nicholas, McCalla Raymer Liebert Pierce LLP; and Erica Fujimoto, Affinity Consulting Group.

The discussion began with an overview and opening remarks from Paden. Attendees were then divided into four breakout rooms, each group tackling a distinct aspect of technological innovation in mortgage default servicing: Current Tech Landscape and Default Mortgage Servicing, Artificial Intelligence and Default Mortgage Operations, Cybersecurity and Data Protection in Default Servicing, and Productivity Tools and Workflow Optimization.

Following 30 minutes of group discussion in the breakout rooms, participants reconvened for a panel-led summary of key insights and takeaways from the respective sessions.

The Current Tech Landscape: Integration and Reinvention

Amy Neumann opened the post-breakout session by summarizing challenges with the current technology stack. She stated that many people are drowning in tools, from Teams to Outlook to proprietary case management systems, client systems, and many more.

The panel noted that while innovation continues to advance rapidly, many servicers and firms still struggle with fragmented systems and incompatible tools. Because of the numerous tools, many of which may not be adopted by an organization, Neumann explained that “[s]ometimes you have to go back to the beginning and rebuild from scratch to stay current,” emphasizing that integration remains a major obstacle.

Neumann pointed to AI-driven quality control as one of the most promising areas for improvement, offering a “second check” to catch compliance or process errors earlier. She also discussed legislative flexibility and technology gaps, urging servicers to be proactive in anticipating changes rather than reacting to them. Her summary of the discussion suggested that modernization offers many efficiencies and opportunities but often requires both technological and organizational reinvention to move forward.

Artificial Intelligence in Default Operations: Promise and Growing Pains

Mike Merritt reported that AI adoption has accelerated dramatically since 2024, noting that “most companies are now using AI in some form.” The breakout session discussed the question of vendor use — when and how third-party vendors can responsibly deploy AI tools on behalf of servicers. Merritt stressed that this depends heavily on risk management and regulatory oversight, both of which remain in the early stages at the state level. In the meantime, the use of AI tools depends on the client and their risk appetite.

He highlighted internal AI use cases, such as automated document generation, policy management, and data organization — tools that streamline processes without exposing sensitive borrower information. However, as adoption spreads, clear communication and explainability become increasingly difficult. Merritt explained that as usage increases, the messaging gets harder, noting that organizations must balance innovation with accountability. He also emphasized that protecting data and infrastructure is critical, and a servicer or vendor must know how its tools are built and how the respective AI models learn.

Cybersecurity and Data Protection: The Human Factor

Brian Nicholas, speaking for the cybersecurity breakout group, framed his discussion around a fundamental question: “Where is the data?” The group identified that one of the biggest threats lies not in external hacking but in unauthorized AI use and third-party vendor breaches. With new AI systems emerging constantly, firms must focus on employee education and vendor oversight to mitigate risks.

Nicholas emphasized that firms often have limited technical recourse after a breach, underscoring the need to reevaluate vendor relationships and data-sharing practices; for instance, questioning whether a full Social Security number is truly needed when a unique identifier could suffice. The session also discussed data retention policies, onshore vs. offshore storage, and evolving phishing techniques.

“The bad actors are using AI too,” Nicholas warned, highlighting that humans remain the weakest link in cybersecurity defenses.

Productivity and Workflow Optimization: The Human-Tech Balance

Closing out the session, Erica Fujimoto summarized her group’s discussion on workflow tools and productivity. She noted that most law firms and servicers rely heavily on Outlook and Microsoft Teams for communication and CRM management. While these tools are powerful, they can also become overwhelming. “Teams tends to get noisy, there’s a constant false sense of urgency,” she observed.

Fujimoto encouraged organizations to leverage AI assistants such as Copilot to help prioritize tasks and reduce digital clutter. Those tasks could include quoting fees and costs; calculating bidding instructions; automating document pulls for claims process; completing claims, etc. She recommended using Copilot to read emails and summarize the prior week.

Her group also discussed e-signature and automation opportunities, noting that many firms still rely on “wet ink” signatures and manual processes. The breakout participants also discussed using AI for KPI dashboards and real-time monitoring, noting that such systems could tell users in real time what’s on fire and making daily metrics easier to monitor.

This session’s discussion led to the conclusion that intentional technology adoption, driven by management buy-in and user comfort, is essential. Leadership must be comfortable with the tools, otherwise implementation will always lag.

The USFNgage webinar offered a timely reminder that while technology is transforming the default mortgage servicing industry, the key to success lies in strategic, informed adoption. From AI integration to cybersecurity vigilance and productivity optimization, each panelist stressed that innovation must be balanced with risk management, education, and adaptability. For mortgage servicers, lenders, and attorneys alike, that future is already taking shape, driven by data, guided by experience, and safeguarded by the weakest link: vigilant users.

Join the next USFNgage on Thursday, Dec. 4, for a peer-driven discussion on Leading through Change: Building Resilient Leadership that Inspires & Perseveres. To learn more or to register for the complimentary webinar, visit https://www.usfnevents.org/usfngage.html.

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USFNews - Dec. 2, 2025