The use of technology can create a more equal environment for underserved communities, says Sun West exec
Most discussions about the use of Artificial Intelligence (AI) in mortgage lending typically center on the automation of menial tasks, which enable brokers to spend more meaningful time with customers.
One mortgage executive has higher hopes for AI usage. He hopes it will bring truly fair lending to the mortgage space.
Pavan Agarwal (pictured top), CEO of Sun West Mortgage Company, cited a recent report from the Financial Times, which stated that Black applicants are more than twice as likely to be denied a mortgage as their white counterparts of the same income level.
Agarwal believes that the use of AI, such as his company’s AngelAi, can eliminate even incidental biases and make the lending process fair for everyone, regardless of their ethnicity, gender, or background.
“What we've demonstrated over the last few years is that when AI is making the decisions and AI is running the process, those racial disparities are eliminated,” Agarwal told Mortgage Professional America. “So (everyone) all becomes basically equal.”
Not intentional bias
Even though studies have shown a disparity in lending, Agarwal doesn’t believe it’s intentional. He said that sometimes it is as simple as certain borrowers having more complex files that the AI can quickly process and approve.
“All that human bias has been dragging down the economy,” he said. “And it isn't that there are bad people. I don't think people are bad or that people are intentionally racist. I think it's just because the deeper credit loans, the deals that have a lot of job changes, eliminate the gig workers, and the gig economy, which is now becoming the norm. That used to be the exception, now the norm.
“People who are doing the work every single day would rather not work on those kinds of complex situations. If you're doing it manually, it's really hard, and they're scared to death of making a mistake. That's the other side, that if you have more paperwork that's being processed manually, there are more chances of a mistake.”
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— Mortgage Professional America Magazine (@MPAMagazineUS) September 24, 2025
Agarwal said that people are put in a difficult situation where they have to balance all the factors of the loan. If the loan is a complex file, it makes the situation even harder for a broker or underwriter to navigate.
“We ask human beings to do the impossible, we put them in impossible situations, and we ask them to do everything,” he said. “It's not fair. How many people are out there who get declined, especially redlined by a loan officer, because they just don't want to deal with it? They're not redlining because of the race or the area, they’re just like, ‘This is too much work and I don't want to get it wrong.’ Loan officers and underwriters are really good people put in a bad, no-win situation.”
Generational impact
It’s not just the person who was rejected for a loan who is impacted. Often, if a member of a community is turned down in the effort to get a home loan, it may discourage friends and family from even trying, Agarwal said.
“Hispanic communities and Black communities, they tend to be very close-knit,” he said. “So when your cousin goes and applies and gets declined, it has a chilling effect on the whole community. And then others in the community won't even try. That's why Black home ownership has been declining over the last 10 to 15 years, because of this feedback loop. When one person in the community is declined, it discourages 10 others.
“The current stats are that for every two Black borrowers who are declined, one should have been approved. For every four veteran borrowers who are declined, three should have been approved. For every seven Hispanic borrowers who are declined, four should have been approved.”
When people in those communities are turned down when they should have been approved, the impact is more than just one funded loan, Agarwal said. He notes that homeownership strengthens communities and allows for personal and community economic growth.
“What does homeownership mean?” he said. “Our community is growing. It means wealth is being generated. It means people laying down roots and investing in their communities. Housing growth always means economic growth. If you start excluding a lot of people from the housing market, you're excluding a lot of economic activity.”
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