Newrez exec warns mortgage firms on rising AI costs

Mortgage companies are adopting AI while many tools remain priced below their underlying cost because of venture capital support. Venture capital spent approximately $242 billion on AI in the first quarter of this year, but Newrez chief information officer Brian Woodring expects those subsidies to weaken as AI companies seek stronger revenue and profit growth.

Woodring predicts a four- or five-times increase in AI token costs and says many companies are exposed because they use the most expensive models for tasks that do not require them. He compared the practice to using a sledgehammer for every job, warning that higher costs could make smaller AI projects fail ROI tests.

Newrez is preparing by treating AI as a set of specialized tools, training non-technical employees through AI boot camps and letting business teams build applications in a secure environment. The company uses AI to monitor inbound communications across its 4 million-loan portfolio, while its chatbot resolves customer issues more than 80% of the time, sometimes above 90%.