The Future of Home Financing: Inside Chestnut’s AI-Driven Lending Platform
For decades, the mortgage lending industry has remained shackled to outdated processes and inefficient systems. While digitization has touched many industries, mortgages continue to rely on labor-intensive workflows. Nearly 80% of employees at traditional lending institutions still spend their time on manual tasks—filling out forms, reviewing documents, and transferring data across siloed systems. This inefficiency costs lenders more than $12,000 per loan, amounting to a staggering $61 billion annually across the U.S.
These excessive operational costs are ultimately passed on to consumers in the form of higher interest rates, extended timelines, and tedious application experiences. Despite surface-level digitization in the form of online portals or e-signatures, the core of mortgage operations remains fundamentally broken.
Enter Chestnut, a bold new startup with a radical premise: reimagine mortgage lending through automation-first principles.
Who Is Behind Chestnut?
Spencer Brown, the founder of Chestnut, isn’t a newcomer to the mortgage technology space. This is his second mortgage startup. His previous venture developed a Loan Origination System (LOS) used daily by 80% of lender employees, handling 2% of all U.S. mortgages annually. Through that experience, Spencer gained a front-row view of the friction and inefficiency embedded in conventional lending.
A coder since the age of 12 and a startup founder since 16, Spencer also worked as an early engineer at six other seed- and A-stage ventures before launching Chestnut in Spring 2025. Now, backed by Y Combinator and based in San Francisco, he’s taking on the industry directly—by becoming a lender himself.
How Does Chestnut Use AI to Automate the Lending Process?
Chestnut is not merely applying automation as a productivity booster; it's replacing the human-intensive core of mortgage lending. Its AI agents are designed to perform nearly 99% of the tasks that would otherwise require manual intervention. These agents:
- Act as AI loan officer assistants: Chestnut’s in-house AI assistant, Ashley, handles conversations, answers customer questions, and manages document collection.
- Shop rates across 100+ lenders: As a mortgage broker, Chestnut uses AI to compare deals in real time, ensuring borrowers receive optimal rates without the need to navigate multiple sites or branches.
- Automate the origination process: From income verification to credit checks, Chestnut’s agents carry out end-to-end operations that traditionally required weeks of coordination between multiple stakeholders.
- Monitor market conditions: The system tracks interest rate changes and proactively notifies clients when it might be a good time to refinance or lock in better terms.
In doing so, Chestnut achieves two powerful outcomes: lower interest rates for borrowers (saving 0.5% or more) and vastly reduced operational overhead for the company itself.
Isn’t Mortgage Lending Already Automated?
This is a common misconception. Many consumers assume the process is already “digital” because they upload documents online or sign papers electronically. But under the hood, the system is deeply fragmented.
Traditional mortgage lenders run on legacy systems cobbled together over decades. True automation would require replacing these systems, rewriting internal procedures, and retraining thousands of employees. As Spencer notes, this could take a decade or more for incumbents to execute—an opening Chestnut is seizing.
In contrast, Chestnut was built AI-first from day one. With no legacy systems to maintain, it can scale and adapt rapidly. It's not about patching old systems—it’s about starting over with AI as the core operator.
What Makes Chestnut’s Approach Unique?
Chestnut is not offering AI as a support tool for traditional lenders—it is the lender. This vertical integration allows Chestnut to own and optimize every part of the lending pipeline, creating a compounding advantage:
- Speed: Application and underwriting are processed in a fraction of the time.
- Cost: By removing manual labor, operational costs drop dramatically.
- Accuracy: Fewer humans involved means fewer mistakes, delays, and compliance risks.
- Transparency: Borrowers can interact with AI agents that offer clear, real-time updates without the delays of human bottlenecks.
This allows Chestnut to deliver a customer experience 10x better than the average mortgage provider—an industry notorious for its frustrating, slow, and opaque processes.
Where Is Chestnut Currently Operating?
As of 2025, Chestnut is licensed in Texas and Colorado, with plans to expand rapidly into other U.S. states. In these regions, they are already supporting a wide array of mortgage services, including:
- New Home Purchases
- Refinances
- Cash-Out Refinances
- Home Equity Loans
- Home Equity Lines of Credit (HELOCs)
Their entry strategy focuses on brokering initially, comparing hundreds of options for consumers, before moving further upstream into full-stack lending across more states.
How Much Can Borrowers Save With Chestnut?
By eliminating bloated back-office processes and adopting AI agents instead of loan officers, Chestnut is able to offer interest rate reductions of 0.5% or more compared to traditional lenders.
While half a percentage point may sound modest, on a $400,000 loan, that’s more than $20,000 saved over the loan term. Multiply that across millions of homebuyers, and the economic impact becomes profound.
Moreover, borrowers gain not only financial savings but also time savings and peace of mind. No more weeks of email chains, delays from missing forms, or mysterious credit pulls—just a clean, transparent process optimized by machines.
What’s Next for Chestnut?
The vision doesn’t stop at mortgages. With the infrastructure they’re building, Chestnut could evolve into a platform that supports AI-powered consumer finance at large, expanding into insurance, personal loans, or even financial planning.
But for now, the focus is clear: reinvent the mortgage experience from the ground up. As regulatory approvals expand and as AI capabilities deepen, Chestnut is positioning itself as the default digital mortgage lender for the 2020s and beyond.
Given the founder’s track record, the urgent pain points in the industry, and the speed at which AI-native startups can scale, Chestnut is not just a promising experiment—it might very well be the future of home lending.
Why Does This Matter for the Future of Finance?
Chestnut exemplifies a broader shift happening across fintech: the move from digital enablement to AI-native operations. It's no longer enough to offer online access or automate surface-level tasks. The next wave of financial services will be run almost entirely by intelligent agents—cheaper, faster, and more accurate than human teams.
And as Chestnut proves, it’s not only possible—it’s already happening. By putting AI at the heart of the mortgage system, Chestnut is paving the way for a smarter, more accessible, and more affordable financial future.