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Patrick McKenzie Profile picture
@patio11
Aug 12, 2019 • 8 tweets • 2 min read • Read on X
In the category of "It's obvious that there are huge chunks of the economy which need one SFBA-startup quality workflow web app", I give you blend.com , which did that for mortgage origination at banks / credit unions / independent mortgage originators.
It's one of those magically mundane things. The business process here is extremely well-understood; the actual front end and backend processes in the US for mortgage origination are, and this is a technical term, a roaring pyroclastic tire fire.
I went through Blend's white labeled process while trying to get pre-approval to hopefully help a family member out, and literally sent a human two emails "Sorry only have 15 minutes so no possible way this is done today" "Erm ignore the last I think it's ready for you."
This is helped by me being preternaturally organized but sufficient data entry for a mortgage application being collectable in 15 minutes is pretty stunning to me, even with all of the documents ready to go.
If you want to read about mortgage origination and understand why "Hmm this seems like a frontend-heavy web application that one could reasonably deliver in a hackathon" is not coextensive with the actual solution, see
amazon.com/Digitally-Tran…

(Disclaimer: read critically.)
A non-obvious challenge here is that the most important consumer for a home mortgage is not obviously the person buying the house, it is the GSE or other financial system entity which is going to securitize the mortgage.

They have *much* more exacting requirements.
And, structurally, they will *never* talk to the person buying the house, the bank that person has the down payment at, the HR department certifying that that person is gainfully employed, etc etc, *but* they have a lot of very specific questions for *all* of these people.
And so the mortgage loan originator has to have all their paperwork together and pre-reviewed prior to sending it over to the securitizing party.

And if they don't? Well, then they're at substantial risk of either eating the home loan or carrying it on their books for 7+ years.

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More from @patio11

Patrick McKenzie Profile picture
Nov 5
If I clipped every good Byrne Hobart or Matt Levine line I’d never get around to writing my own stuff but this from Byrne is too good to not share: Image
An extraordinary fact about finance is that there are some firms which are financial service providers specifically for scams which sometimes, almost as an industrial accident, bafflingly end up in a contractual relationship with a legitimate, successful company.
These underwriters are not necessarily that; some overlevered highly “structured” IPOs of midmarket software businesses should have a non-zero price, and a capitalist should not say they are a scam just because he is not a buyer at that price.
Read 8 tweets
Patrick McKenzie Profile picture
Oct 27
How much could would you write if you could one-shot 10-100 line shell scripts or similar almost all of the time, in 10 seconds? You would write a stupid amount of code. Who cares if it is disposable? Dispose of it; it's basically free.
"But what if the code is wrong?"

Skill issue, code is free to you. Write a test suite too, designed to be thrown away in under a minute. Write three independent implementations and vote on the answer. etc, etc
"Have you actually done this?" Yeah, to a minor degree, and I'll recount a bit more when I do some writeups about my experience with LLM programming. After a few weeks of climbing the skill curve instead of some direct questions I'd say "Goal: *direct question* You should..."
Read 11 tweets
Patrick McKenzie Profile picture
Oct 22
Me to financial firm: *address change form*
Financial firm: Is this five digit number a post code?
Me to financial firm: Oh you have asked exactly the right person for geeking out about post codes. Did you know...
Second thoughts: That was not the efficient way to answer.
"Why didn't they know what a post code looks like?"

Because a post code can look like so many things, like 100-0001, 20500, or SW1A 1AA, to use three codes from three nations that all correspond to a particular famous building/complex within them.
A further fun fact: some nations don't customarily use post codes and others don't customarily use addresses, favoring a natural language description of the recipient which is sufficient to get a mail carrier to successfully route to them.
Read 10 tweets
Patrick McKenzie Profile picture
Oct 16
Still working on a few essays about what I learned on using LLMs for coding but if you want a sneak peak, Complex Systems this week discusses the game I made in some detail.

I’m probably adding one essay to the series on LLMs for taxes.
It feels a bit weird to need to continue saying this, but yes, LLMs are obviously capable of doing material work in production, including in domains where answers are right or wrong, including where there is a penalty for being wrong. Of course they are.
“Why?”

Because a lot of discourse weights people and actors heavily where they cannot be right or wrong in any way that matters, and where correctness does not materially result in a different incentive for them.
Read 6 tweets
Patrick McKenzie Profile picture
Oct 9
So October 15th, the extended US tax deadline, is just around the corner, and I have some observations which are more about LLM progress than taxes.

Background: many people professionally involved with LLMs estimate 2026-2028 as the year where one can get an LLM to "do taxes."
I have a fairly complicated situation and have put more of my points into tax procedure than many AI researchers, and I did not previously expect to actually have this capability available in 2028.

On basis of experience with review, but not full execution, rethinking that.
I think the most likely form factor for actually deploying this in the real world is a software company which integrates LLMs as a component but also has a lot of special sauce.

Be that as it may, what I actually had available yesterday was the standard chat interface.
Read 33 tweets
Patrick McKenzie Profile picture
Oct 5
I think the economic logic of this is inevitable, in that you’ll ~need video to get your N+1 marketing post through the noise on social media even as a Taylor Swift, and your choices are either a $100k shoot *per post* or a relatively junior employee with some taste.
Also expect the friendly neighborhood barbecue joint to get the same-y Madison Avenue look on their ads versus the Comic Sans and pink aesthetic that they might otherwise have ended up with.
“Is that shoot really $100k?”

It probably is if you do it the way her media operation would do it. You can get it done scrappily for like $4-10k. Partly that’s because major brands with professional review teams are buying a different artifact than “Just the file please.”
Read 5 tweets

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