Better.com & OpenAI Launch ChatGPT App to Speed Up Mortgages

The online mortgage market is bracing for disruption as Better.com has launched a new application within ChatGPT designed to dramatically accelerate the mortgage underwriting process. The tool, developed in partnership with OpenAI, aims to reduce the time it takes to approve a mortgage from an average of 21 days to as little as 47 seconds, a claim that has already sent ripples through the sector.

Better’s stock experienced a significant jump on the news, rising as much as 5% in trading Thursday, although shares of established players Rocket Mortgage and United Wholesale Mortgage (UWM) saw declines of 6% and nearly 4% respectively, signaling investor reaction to the potential shift in the competitive landscape. CNBC first reported the development, which was formally announced later the same day.

The core of the new application lies in combining Better’s existing mortgage engine with OpenAI’s advanced models. This integration automates dozens of underwriting checks traditionally performed by loan officers at banks, mortgage brokers, and fintech firms. According to Better CEO Vishal Garg, the app isn’t intended to replace loan officers, but to augment their capabilities, freeing them from repetitive tasks and allowing them to focus on more complex aspects of the loan process. “Taking the mortgage underwriting process…from 21 days to as little as 47 seconds…is a huge unlock for everyone,” stated Giancarlo Lionetti, OpenAI’s chief commercial officer.

The speed gains are achieved by simultaneously running parallel workflows on numerous checkpoints, including appraisals, title reports, income verification, credit reports, and other key metrics. Garg explained that this isn’t a simple series of individual tool calls, but rather a complex, multi-step process leveraging a “very large context window” within the OpenAI models. This suggests a sophisticated application of OpenAI’s technology beyond simple chatbot interactions.

Better is explicitly positioning this technology as a direct challenge to industry leaders like Rocket Mortgage and UWM. The company believes the app will enable rival lenders to approve loans faster and reduce costs, potentially eroding the market share of established players. Garg argues that these larger companies profit significantly from the lengthy underwriting process, effectively charging a “tax” of around 1.5% on each mortgage. He estimates this represents approximately $20 billion paid annually by American homebuyers.

This strategy represents a significant pivot for Better, which is transitioning from being primarily a direct-to-consumer lender to a “mortgage-as-a-service” technology platform. The company aims to license its technology to other mortgage providers, allowing them to benefit from the increased efficiency and reduced costs. This shift follows Better’s previous move to go public via a special purpose acquisition company (SPAC), a deal that ultimately fell through.

Better’s move is part of a broader trend of artificial intelligence firms targeting inefficiencies across the financial services landscape. The mortgage industry, historically reliant on manual processes and paperwork, is particularly ripe for disruption. The U.S. Home-loan market originates more than $1 trillion in mortgages annually, presenting a substantial opportunity for companies that can streamline the process and reduce costs. Better’s collaboration with OpenAI extends beyond this new application, encompassing enterprise-wide deployment of ChatGPT across its 1,400 employees and the use of OpenAI’s multimodal models for its “Betsy” platform.

If Better’s claims hold true, the new application could translate into significant benefits for consumers. Faster loan approvals could accelerate the home-buying process, while reduced underwriting costs could potentially lead to lower mortgage rates. However, the extent to which these savings are passed on to consumers will depend on market competition and lender pricing strategies. The speed of approval also raises questions about the thoroughness of the underwriting process, and whether it could potentially increase risk. It’s important to note that the 47-second timeframe likely represents an ideal scenario and may not be achievable in all cases.

The immediate next step for Better is to fully integrate the ChatGPT application into its platform and begin offering it to its network of lenders. The company will also be focused on gathering data and feedback to refine the technology and improve its accuracy and efficiency. Wider adoption of the app will depend on its ability to demonstrate tangible benefits to lenders and maintain a high level of compliance with regulatory requirements. The success of this venture could hinge on whether Better can convince established players like Rocket Mortgage and UWM to embrace the technology or risk falling behind in a rapidly evolving market. Further details regarding the pricing model for the “mortgage-as-a-service” platform are expected to be released in the coming weeks.