AI Fatigue Is Real in Mortgage Lending—But Manual Processing Is Still Costing You More

Mortgage lenders aren’t skeptical of AI because they’re anti-innovation. They’re skeptical because, after years of hype, the fundamentals haven’t improved nearly enough.

According to the Mortgage Bankers Association, the cost to originate a mortgage
exceeded $12,500 per loan in early 2025, and even after modest improvement, remained above $10,900 per loan mid-year. For many lenders, that leaves razor-thin—or negative—margins.

The Core Problem 

At the heart of this cost problem is document processing. Despite digital portals and e-signatures, the reality is that most mortgage documents still require extensive human review.

Manual document processing continues to be one of the biggest cost drivers in mortgage operations:

• Income, asset, and disclosure documents still require multiple rounds of human review
• The same documents are Classified, Indexed, Extracted, Re-validated across underwriting and QC

When pull-through rates fall, as they have recently, lenders absorb these costs even on loans that never close.

Why earlier “AI” didn’t help  

This is where AI fatigue sets in. Many lenders tried early automation tools that promised transformation but delivered little more than OCR and keyword matching. These tools reduced typing but didn’t eliminate work.

Generic AI struggled with:

❌ Mortgage-specific document formats
❌ Edge cases and investor overlays
❌ Inconsistent data across files 

The Solution That Actually Works

The newer generation of AI-enabled document processing is fundamentally different. Instead of simply reading text, these systems understand document structure, extract data with context, validate it against rules, and flag inconsistencies automatically.

The result is

The ROI isn’t theoretical. Lenders using purpose-built AI document workflows, conbined with Human in the Loop reviews, are seeing material reductions in manual effort, faster cycle times, and more consistent file quality across underwriting and QC.

The Bottom Line: Better tools with AI & Automation

For lenders exhausted by AI promises but still under pressure to cut costs, the answer isn’t more tools—it’s better ones.

Alchemist Solutions delivers proven, production-ready AI for mortgage document processing that integrates with existing systems, reduces cost, and improves outcomes without ripping out current workflows.

To learn more, contact info@alchemistsolutions.io

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 Source: https://sf.freddiemac.com/articles/insights/2025-updates-to-the-cost-to-originate-study