Lennar Mortgage chief sees AI and alternative credit scoring as keys to expanding homeownership
The mortgage industry is undergoing its most significant transformation in decades, driven by artificial intelligence adoption and regulatory changes aimed at expanding access to homeownership, according to Laura Escobar, president of Lennar Mortgage and 2025 chair of the Mortgage Bankers Association.
Speaking on the National Housing Conference’s “Beyond Four Walls Conversations on Affordable Housing” podcast with host David Dworkin, Escobar outlined how lenders are leveraging new technologies and credit models to address the nation’s housing affordability crisis while navigating challenges from soaring insurance costs to regulatory reform.
A major breakthrough came with the Federal Housing Finance Agency’s recent announcement of alternative credit scoring models—a move Escobar called “historic” for the industry.
“It’s not just a change in score models. It’s an opportunity to modernize the way we evaluate creditworthiness,” Escobar told Dworkin. “We’ve been talking about innovation in this space for so long, and now we’re finally seeing something take shape.”
The new models have the potential to expand access to homeownership by scoring borrowers earlier in their financial journey, particularly benefiting communities historically underserved by traditional credit assessments. “We’re really hopeful that it’ll expand access to home ownership, especially for people who’ve historically been left behind by traditional models,” she said.
However, implementation presents challenges. “We need buy-in. We need an alignment across all data holders, loan originators, the GSEs, mortgage insurers, and of course, investors,” Escobar noted, emphasizing the need for industry-wide coordination.
At Lennar Mortgage, artificial intelligence has become integral to operations, though not always where executives initially expected. “I thought AI would first show up in underwriting. I thought that was going to be the easy fix, but there’s so much gray area, especially now with income analysis, gig economy, variable income,” Escobar explained.
Instead, AI is proving most valuable in customer service and operational efficiency. The company uses Microsoft Copilot to help loan officers improve email communication with borrowers, while AI-powered bots named Astral, Elroy, and Judy handle disclosure processing and data validation.
“We use AI in meetings. It helps us take notes and create action items automatically,” Escobar said, highlighting how the technology enhances productivity across multiple touchpoints.
Data security remains paramount. “We’re deliberate about not using any external AI platform. Everything we use is internal and contained,” she emphasized, warning against uploading sensitive borrower information to public AI systems.
Rising homeowners insurance costs present a growing challenge to housing affordability. Since 2020, average home insurance premiums have increased 61 percent, while coverage has declined 35 percent, according to statistics Escobar cited.
“We’re paying more and getting less protection,” she said, noting that some borrowers now dedicate over half their monthly mortgage payments to taxes and insurance rather than principal and interest.
The crisis stems from increased natural disasters affecting previously low-risk areas. “It’s not just Florida and California anymore,” Escobar observed. “We’re having catastrophic weather events all over the country and much more frequently.”
The Senate’s bipartisan ROAD to Housing bill offers hope for addressing regulatory barriers that make small-dollar mortgages unprofitable. Current point-and-fee regulations, designed to prevent abuse during the mortgage crisis, have made loans under $200,000 difficult to originate due to fixed costs.
“Until we do that, this is going to continue to be a problem,” Escobar said, supporting the bill’s provision requiring regulators to evaluate existing limitations.
The legislation’s bipartisan Senate Banking Committee approval was particularly encouraging. “That is so very rare that we see that coming out. And it gives me hope that we can keep that cooperation going,” she noted.
The Mortgage Bankers Association’s convergence initiative represents another approach to expanding homeownership opportunities. The program works with diverse stakeholders in individual communities to increase housing supply and affordability, with successful implementations in Philadelphia, Columbus, and Memphis, and Baltimore selected as the next convergence city.
“We find creative ways to bring more housing supply and find new approaches to expanding affordability,” Escobar explained. The initiative is scaling through a new independent 501(c)(3) entity that will deploy over $1 million annually to expand impact.
At Lennar, the parent company is responding to insurance and climate challenges through innovative construction methods. The homebuilder has experimented with 3D-printed homes in Austin, micro homes in Texas, geothermal technologies in Colorado, and partnerships in California on new building methods.
“We’re constantly dipping our toe [in new ventures]. And that’s one of the things that I’m so proud to work for a company that it’s not just about building homes one in track after the other,” Escobar said. “It’s about tomorrow’s homeowner and what that looks like.”
As the mortgage industry continues evolving, Escobar’s message is clear: “It’s always been the theme, evolve or die. And AI is just the next step in and evolving.” The combination of technological advancement, regulatory reform, and innovative building methods suggests the industry is positioning itself for significant change in how Americans access and afford homeownership.
