Blockchain technology is not just good for creating cryptocurrencies but also useful in the mortgage lending practice. A platform built upon the blockchain tech and cloud based services can completely transform the loan lending process for businesses.
A blockchain network allows the reporting process to become faster and more secure, giving stakeholders the end-to-end solutions that make their jobs easy.
Blockchain networks build a really robust system of member identification. This can greatly increase the processing times for stakeholder communication.
For example, a single borrower can create a digital ID that contains all their information in one place. This includes information about their mortgage history, outstanding balances, credit score and income etc. When applying for a home mortgage from different banks, this one ID can be used at multiple lenders and even used for cross checking with credit agencies and employment verification.
Transparency for Investors
A lender’s decision on whether to approve a mortgage or not is highly dependent on the bank’s ability to verify the attached documents. Imagine if all these documents were submitted to the lender already verified from the beginning?
The blockchain technology cannot be manipulated by a single individual and data once recorded cannot be reverted back to its original form. In a blockchain ecosystem built for mortgage industry, this helps create a lot of transparency for the lenders. They can find out the transaction history for an applicant from the initial submission to actual fulfillment of the loan.
Improved Servicing Efficiency of Loans
Loan servicing businesses face data management challenges during loan collection and transfer processes. Blockchain technology could help make the process more efficient and streamlined. It is even possible to eliminate the entire servicing industry and replace it with a blockchain.
Blockchain can enhance the sharing of common data by solving data inconsistency problems that take place during servicing transfers.
In case of changes in the regulatory rules, blockchain can be adjusted to the new legislation more easily compared to the existing model where each firm is open to a different interpretation of the new government policy. Exchanging data through blockchain makes the system more cooperative and adds security.
A National Registry of Titles
Blockchain allows the creation of smart instruments like property titles. The power of blockchain is that it can create a title that cannot be manipulated or copied which removes the chances of forgery.
By creating a national registry of property titles on Blockchain, the process of title verification could become incredibly fast. Verification of property titles in the US takes 3 days to a week right now. This process could be completed in less than a minute.
The blockchain technology is still in its infancy and there is a lot of room for improvement and growth. Smart entrepreneurs are continuing to test and develop new ways to use the technology in a number of industries that are dependent on maintaining records of transactions and ownerships. The mortgage industry can gain a lot of benefits from blockchain implementation by reducing costs, improving processing times and raising efficiency in loan servicing.
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