The next time you apply for a mortgage, or your lender services that loan or sells it on the secondary market, you might be helping to disrupt an industry. That’s because the entire transaction, or at least parts of it, may be powered by blockchain in the not-too-distant future.
Blockchain – most simply defined as a decentralized, immutable digital ledger – is perhaps best known as the technology underlying digital currency. But blockchain is also being increasingly adopted by tech companies in the mortgage space seeking to revolutionize and disrupt the industry.
“There are a lot of different use cases – everything from information sharing in the origination ecosystem to servicing to title and capital markets,” said Debbie Hoffman, CEO and founder of Symmetry Blockchain Advisors in Orlando, Fla. “Mortgage has a very long supply chain, from the initial marketing and purchase of a home to the origination of a loan, servicing a loan, selling a loan and the secondary market, and within each one of those sectors there are areas where you could have a blockchain.”
The advantages of blockchain are encouraging disruptive companies to integrate it into their operations. Hoffman said that blockchain makes the process of originating a mortgage simpler, easier and cheaper because blockchain allows information sharing so the cost of producing the loan is less – a savings that players say will be passed along to the consumer. For investors, the advantage of blockchain is accuracy – the odds of having defects in the loan are lower, Hoffman said, because there are fewer inputs along the way and transparency in the process. “Those are the two areas where I see tremendous value,” she added.
Although change is taking place slowly – “there has not been much progress, sadly,” Hoffman said – some companies are already utilizing blockchain or about to launch new technology incorporating it in 2021. These include: