How will blockchain technology give opportunities and value to lenders who are involved in the mortgage industry?
You won’t listen in on a conversation about emerging technologies without hearing someone mention the blockchain. First it was cryptocurrency, then non-fungible tokens and now blockchain.
It won’t solve all of our problems, but it could solve some and add significant value to mortgage lenders in the process. Consequently, we’re considering it carefully, as we do all emerging tools.
Our initial analysis indicates that blockchain technology is an opportunity for the mortgage industry, though it won’t play a role in the loan origination process anytime soon.
Where we’re hearing the most buzz about blockchain technology in the mortgage space is in capital markets. Some believe blockchain may be a more elegant solution than our current process, which involves making MERS the original mortgagee.
MERS has done a great job as an industry utility, but it’s hard to beat the utility in an algorithm that can track and retain the details on every mortgage ownership in the country as cheaply and quickly as a blockchain application could.
We’re also seeing some companies using blockchain to facilitate the sale of whole loans and servicing rights. We expect this to become commonplace in the near future. It will take longer on the origination side of the business. This is exciting because, if taken to its logical conclusion, it could change the way lenders work with their warehouse lenders.
One of the primary responsibilities of a strong mortgage industry technology partner is to keep one eye focused on the future so lenders are never blindsided by emerging risks or miss out on opportunities. As a result, we are watching blockchain technology closely and stand ready to make use of it should the opportunity present itself.
One of the reasons that we continue to stand ready is that should blockchain find application in the loan origination process it would require a fast and seamless integration with the LOS so that the right data -- and only the correct information -- made its way onto the blockchain.
We’re not there yet, but we’re living in a forward-thinking world. It’s likely that tools like blockchain will eventually make their way upstream. The smart money is betting that when it does it will be closely coupled to the LOS. When it’s time for that to happen, we’ll be ready.
By Joe Camerieri, EVP, Sales & Strategy at Mortgage Cadence
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