Staircase leverages blockchain in new servicing transfer technology

Staircase, a fintech company that's been compiling an expansive set of interconnected digital mortgage tools, introduced new blockchain-based technology for servicing transfers on Tuesday.

The latest automation is aimed at ensuring compliance sensitive information gets transferred correctly in an active mortgage servicing rights market. The Consumer Financial Protection Bureau has some specific requirements around this process, with a particular focus on ensuring it doesn't interrupt modifications or other loss mitigation in progress.

"MSRs transfers are increasing in volume given the increased value of the servicing rights, so it's just a natural market to spend a little more time in right now," said Adam Kalamchi, co-founder and CEO of Staircase.

A growing number of fintechs have been looking to update automation used by servicing operations, which have become more prominent as rates have risen. Recently, for example, Valon teamed up with a quality control provider called ACES to address needs in the space; and distressed mortgage-technology provider Clarifire linked its platform to one IndiSoft has to loop counselors into the servicing process.

At the same time, blockchain technology and the cryptocurrency it was initially designed to record are increasingly being used within the mortgage and banking industries, though there's been some regulatory caution around the latter. Startup Moon Mortgage, a lender that plans to use crypto to partially secure loans, recently raised $3.5 million in seed money, and Bank of New York Mellon on Tuesday officially launched digital-asset custody services.

"We use an immutable ledger so that you can actually say that we know every change in income, every single change in the loan balance, which adds a lot of richness around analytics and risks and auditability of how the loan file was created, so that's one benefit of using blockchain. The other one is really secure data sharing," Kalamchi said.

Staircase's latest technology works with its Loanboarding platform, which uses machine learning to extract and classify data from loan documents and then applies quality control procedures to it.

Other automation Staircase has offered include technology used by private mortgage insurers to automate non-delegated underwriting of MI policies in conjunction with home loans. It also offers a tool for selective pre-approvals, and one that connects lenders to credit reporting vendors. It generally charges a $50 fee per loan, or less if the Loanboarding automation is used in conjunction with the new MSR transfer technology.

"We've already attacked loan boarding, which is a very complicated process to get right and at a low cost, the same for MI, and MSR transfer is just a natural extension of that," Kalamchi said.