Non-Bank Mortgage Lenders Must Embrace AI to Innovate Lending in 2025

Non-bank mortgage lenders are at a critical juncture in a fast-evolving housing economy. A new joint study by HFS Research and Cognizant, titled “Reinventing the Non-Bank Mortgage Lending Journey in the Age of AI,” highlights the operational challenges, regulatory pressures, and technological disruptions shaking the industry. While many lenders struggle, a forward-thinking minority is pioneering a new approach driven by digital innovation and AI.

Industry Landscape and Challenges

The mortgage lending fundamentals remain unchanged, but speed, intelligence, and precision in delivery have transformed drastically.
Many lenders face operational fatigue and a heavy compliance burden; one executive reported receiving over 1,700 regulatory alerts in a single year.
Only 21% of lenders view themselves as true innovators; most are stuck in defense mode, trying to keep pace with modernization.

The Role of AI and Emerging Technologies

Agentic AI, combining Generative AI and automation, is emerging as a powerful force for operational efficiency.
Intelligent Document Processing (IDP) addresses bottlenecks in paper-heavy workflows, helping lenders bridge the gap to full digital maturity.
Real-time integration remains a challenge, with 58% of lenders unable to support it, limiting data agility and decision-making speed.

Strategic Recommendations for Lenders

Move beyond legacy systems to support real-time data integration and faster decision-making.
Prioritize investments in AI underwriting, IDP, cybersecurity, and other technologies with clear ROI.
Redefine outsourcing partnerships to go beyond cost-cutting and focus on platform modernization and AI deployment.
Focus on value creation by blending automation, data platforms, and talent into an integrated operational cycle.

Industry Voices

Saurabh Gupta, President of HFS Research, emphasizes the need for digital-first, modular, intelligent operations to define the next era of mortgage lending.
Divya Iyer from HFS highlights the momentum around Agentic AI and the practical benefits of technologies like IDP.
Ajay Pandita of Cognizant stresses the importance of purposeful innovation and full-service partnerships to transform mortgage lending.

The non-bank mortgage lending sector must shift from reactive cost-cutting to purposeful innovation to thrive in 2025 and beyond. Embracing AI-driven tools, modernizing outsourcing strategies, and focusing on seamless digital operations will position lenders to meet growing market demands and regulatory complexities. The lenders who adopt these changes will lead the transformation of mortgage lending into a faster, smarter, and more efficient industry.