6 ways blockchain and crypto are reshaping mortgage products

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From the tempting prospect of mortgage-free homeownership for $1,000-a-month to the launch of a new bitcoin-collateralized mortgage product, digital currencies and blockchain technology are having a major impact on the mortgage industry.

For more on these stories and other developments that are transforming the mortgage landscape, scroll through to read our roundup.

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Mortgage product allows borrowers to post bitcoin as collateral

Borrowers who are looking to use bitcoin as collateral for a real estate purchase can now take advantage of a new mortgage product launched by venture-backed fintech Milo Credit. The product allows bitcoin holders to post the digital assets without converting them to dollars.

“We are looking at their crypto, plus other factors that we have in our underwriting, but they don't have to come with dollars,” said Milo Credit CEO Josip Rupena. “That allows them to not have to go out in the conventional world and sell their crypto.”

For some, however, cryptocurrency’s volatility carries too much risk for it to be accepted as collateral. “To have value as a medium of exchange, you and I need to instantly be able to determine the value of something in that cryptocurrency,” said David Sacco, finance program resident at the University of New Haven. “We’re not there yet.”

Read more: Crypto mortgage product allows borrowers to post bitcoin as collateral 
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Blockchain alternative to the mortgage electronic registration system launched

Mortgage fintechs Blue Sage Solutions and Docutech are joining forces with Digital Asset Registration Technologies to create an alternative registry to the mortgage electronic registration system.

Developed by Figure Technologies, the new registry utilizes blockchain to automate the onboarding of assets and real-time settlement of loan pledges and sales. Unlike MERS, DART also prevents duplicative registration of loans and riskier settlement arrangements with multiple parties.

“DART not only allows for rapid settlement, but also provides an additional layer of security by making the records immutable,” said Carmine Cacciavillani, founder and president of Blue Sage. 

Read more: Blockchain MERS alternative from Figure integrated with fintechs
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Figure sells eNote mortgages as NFTs in blockchain marketplace

The groundbreaking sale of eNote mortgages to an asset management giant using blockchain technology is the latest sign of the growing impact of the technology.

Figure Lending originated and sold the mortgages to asset manager Apollo via the Provenance Blockchain marketplace using NFTs as the assets. Apollo purchased the loans with a digital currency.

“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,” said Figure’s general manager Daniel Wallace.

Read more: Figure sells eNote mortgages as NFTs in blockchain marketplace 
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Fintech launches blockchain-powered mortgage-free homeownership for $1K per month

Homeownership without a mortgage may become a reality with the announcement that San Francisco-based fintech Haus is offering homebuyers the chance to own property for $1,000 a month, plus other fees, through a home equity partnership powered by blockchain technology.

Available on select homes priced at up to $2 million in California, Colorado, Oregon and Washington, the plan enables investors to trade a property’s equity through the HausCoin cryptocurrency. Qualified home buyers pay a minimum of 10% on a property and Haus purchases the rest in a ten-year partnership that opens up the home’s equity to trading.

Homebuyers “have the ability to buy more equity at any given time at whatever the current price is, or sell equity back to us,” said Haus CEO Jonathan McNulty. “When you buy and sell equity it doesn't actually change your monthly payment.”

Read more: Fintech promises mortgage-free homeownership for $1K per month 
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Blockchain's security and efficiency touted as being “like nirvana”

Advocates of blockchain in the mortgage industry praised the technology’s increased security and efficiency, which could significantly enhance the origination and securitization process, at a recent Mortgage Bankers Association conference.

“Somebody described mortgage production, it’s 14 authors, seven editors and three copywriters putting together a novel and you’re like, ‘Well, I kind of missed some of the story somewhere,’” said ICE Mortgage Technology vice president of technology Christopher McEntee.

However, with blockchain the story becomes clear. Every move and transaction is timestamped in a cohesive, visible audit trail that makes mortgage production “like nirvana,” said McEntee.   

Read more: Mortgage leaders break down the benefits of blockchain 
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Bitcoin-collateralized mortgage launched by cryptofinance firm

Crypto finance platform and asset manager XBTO Group became the latest company to offer a cryptocurrency homebuying option with the launch of its bitcoin-collateralized mortgage for borrowers making purchases of at least $1 million in Florida.

“Linking digital assets to homeownership is a smart way to hold onto digital-asset holdings, but smartly leverages it for immediate utility, a home to live in,” said XBTO CEO Phillipe Bekhazi.

The Miami-based firm has rolled out the new product first to capitalize on the booming housing market in the state as well as the growing population of digital asset wealth holders in its home city.

Read more: Bitcoin-collateralized mortgage launched by cryptofinance firm 
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