New, secure and streamlined mortgage loan registry brings greater efficiency and transparency to the mortgage industry
Figure Lending LLC and Apollo have completed a transaction involving the origination of digital mortgage loans and transfer of ownership via blockchain technology. The secure, streamlined process was a first-of-its-kind in the mortgage industry and holds the potential to revolutionize the $3 trillion mortgage ecosystem.
Figure has begun originating eNote mortgages that are on-boarded as unique digital assets on the Provenance Blockchain. At the same time, they are auto-registered with Digital Asset Registration Technologies, Inc. (DART), a combined lien and eNote registry system developed by Figure Technologies, Inc. and used in place of the “MERS” databases. DART monitors blockchain-based asset transfers and offers a streamlined and more efficient alternative to the existing loan tracking database systems and the often delayed, weeks-long settlement process for paper promissory notes.
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In the transactions, Apollo, through investment vehicles it manages, purchased these digital assets via an integrated, blockchain-based marketplace that, when coupled with use of a connected digital currency account such as USDF, enables real-time, multi-party settlement with less risk.
The friction, risks, and costs involved in the traditional loan sale and delivery process can all be reduced using the DART and Provenance Blockchain systems, which allow for immediate and automated asset onboarding, real-time settlement of loan pledges and sales, and use of an integrated registration system that can automatically reflect transfers of loan interests. The process has traditionally required duplicative registration of a loan in multiple “MERS” databases and slow and risky trilateral settlement arrangements with originators, warehouse banks, and investors.
“With technology impacting all areas of our lives, it is time for participants across the mortgage ecosystem to experience an improved process that simply works better and costs less,” said Daniel Wallace, GM of Figure Lending. “Blockchain can provide enhanced protections and transparency in the ownership process for consumers and real-time settlement for investors, replacing trust with truth to create a faster, more efficient process for everyone. This important development demonstrates just one way that blockchains will provide significant improvements that streamline the mortgage lending space.”
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“When Apollo and Figure formed a strategic partnership, we saw the potential to apply the Provenance blockchain – built specifically for the financial services industry – to processes across the investment lifecycle,” said Apollo Partner Robert Bittencourt. “We are excited to have now completed our first use case with this mortgage transaction, executed in a way that we believe can dramatically improve efficiency in the mortgage and lending ecosystem.”
With these transactions, Figure has mapped the industry’s transition into the modern digital age. The entire mortgage industry – originators, private investors, warehouse lenders, and government agencies – has recently begun to recognize the value of digital mortgages, from reduced shipping and custodial costs to increased accuracy and security. And most importantly, it has increased trading velocity, allowing assets to be sold more quickly, minimizing the need for equity capital, financing lines and mark to market risk.
Using Figure’s fully-digital, tokenized loans – the first of their kind, and representing one of the first and best real-world applications for unique digital assets and NFTs – the lending industry can leverage Provenance Blockchain’s transformative promise of real-time settlement and an immutable loan record. Ultimately, this will lower costs and improve transparency for consumers by reducing the time and expense associated with transferring ownership, verifying data and servicing the customer.
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