Startup Block66 is using blockchain to create a mortgage audit trail for fraud prevention purposes and also plans to enable trading of securities lenders can use to increase their liquidity.
The fintech company will store government mortgage rules, lenders' internal guidelines, and information on properties and loan applications using its blockchain technology with the aim of making the mortgage process more efficient and less susceptible to fraud.
"We created Block66 to offer new opportunities for borrowers and end the time-consuming and paper-driven processes in the mortgage industry," Joe Markham, founder and CEO of Block66, said in a press release. "Our platform will make it easier for everyone to find what they need so mortgages can be approved and funded faster. By storing the history of each transaction on the blockchain, we will provide a valuable audit trail for lenders, which will help mitigate mortgage fraud."
A small but growing number of companies are experimenting with applying blockchain, and, in some cases, tokenized securities trading capabilities associated with it, to mortgage industry needs. Electronic security tokens represent ownership of assets like real estate.
Block66 plans to later apply digital smart contracts with automated verification and enforcement to tokenized securities. Mortgage-backed instruments built from those securities could then be traded on token exchanges and serve as an additional source of liquidity for lenders, according to the company.
"The idea behind mortgage tokenization is to bring in smaller lenders," said Markham. "They are often reluctant to tie themselves to longer repayment plans but are more willing to lend capital to customers who aren't always favored by traditional banking institutions."