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May 4, 2020

Mortgage and Lending Considerations During and After COVID-19

Benjamin Cox, Product Marketing Manager at H2O.ai

The rapid spread of COVID-19 has presented the world with unprecedented challenges and new norms to adapt to: workforces going completely virtual and digital, little to zero travel, and significant uncertainty for small businesses.

The pandemic has had an immediately visible impact on the financial and economic health of many nations. The United States saw 21M new Jobless claims (a 30 Sigma Event), banks hitting their lending ceilings, and potentially most important one-third of renters failed to pay April rent.

In response to these challenges, the United States Congress as well as the Federal reserve have launched over $2 Trillion stimulus programs to try to stabilize the economy while citizens lockdown and combat the spread of this pandemic. Much of this stimulus for small business lending and interest rate adjustments to try to prevent businesses from shutting down or individuals failing to pay their mortgages. Now more than ever it is critical that companies understand their risks when it comes to lending and outline a strategy for lending in the COVID-19 environment.

What AI Can Do:

Response and execution will be critical for financial institutions. Many banks are already under fire for branches not being able to accept PPP (Paycheck Protection Program) applications or not having the infrastructure to support this new initiative. There are a few core areas where AI and machine learning can be applied during the COVID-19 response, such as:

  • Automated and Enhanced Risk Modeling
  • Probability of Default (PD)
  • Loss Given Default (LGD)
  • Exposure at Default (EAD)
  • Foreclosure Risk
  • Forbearance
  • Administration & Processing:
  • Explainability
  • Scenario, Sensitivity, and What-If Analysis
  • Augment & Enrich Data:

How H2O.ai Can Help

These are unprecedented times. Globally, the way in which we work and live has been impacted. Business-as-usual is no longer usual. In working with several of our customers and the community, we are applying our expertise and platforms to solving these challenges that are a direct impact of COVID-19. We’ve developed a new set of AI apps by combining the H2O Q and H2O Driverless AI platforms together to bring automated insights and automated machine learning to a number of business problems that span industries and use cases. Including a new Q Lending App to address the challenges in the mortgage and loan risk modeling space. Learn more today.

Read the full “Mortgage and Lending Considerations During and After COVID-19” executive brief here.

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