Mortgage correspondent lender LitFinancial has launched a stablecoin on an Ethereum blockchain with the initial aim of improving its treasury efficiency and reducing its cost of capital.
Lit, based in Troy Michigan, is working with Brale, a stablecoin-as-a-service platform, and Stably, a stablecoin advisory firm, on the new token which is named litUSD.
Brale is issuing the litUSD token using the ERC-20 standard. Each of those will be backed on a one-to-one basis with cash and cash equivalents held in reserve.
Lit also plans to settle mortgage payments on-chain. It stated it would create publicly verifiable loan performance records and unlock new transparency and liquidity in the secondary mortgage market.
The Federal Housing Finance Agency's exploration of
LitFinancial sells its loans to United Wholesale Mortgage, explained Tim Barry, its CEO.
Some firms use crypto as their treasury to fund operations. Lit is looking to do something similar, but for funding mortgages out of its own treasury with the stablecoin, Barry said.
"Our goal here is to be able to use this treasury to reduce our cost of capital and be able to offer a better price to the consumer," Barry said. "This tool allows us to basically just get access to capital at a much cheaper level than traditional financing."
How changes in Washington help the development of litUSD
The GENIUS Act allows companies like Lit to take the dollars backing the stablecoin and lend them in the DeFi markets, looking to have a lower cost of capital.
Barry gave an example. "We'll go out and we'll buy bitcoin and then we'll be able to then leverage it through litUSD as a stablecoin, and then we have it in our treasury, and we can lend it out into the DeFi markets," he said.
"The launch of litUSD demonstrates how regulated financial institutions can adopt stablecoin technology within clearly defined legal frameworks like the GENIUS Act," said Ben Milne, CEO of Brale, in a press release. "This model sets a precedent for traditional companies seeking financial efficiency and growth."
Lit is able to offer the full menu of mortgage products; this is just a different way of financing, Barry reiterated. But consumers will not see anything different from any other mortgage originator if they go to Lit.
How LitFinancial is growing
LitFinancial has over 100 staffers, including 70 loan officers. It did $90 million in submissions in August and is on pace to do between $100 million and $120 million this month, closing between $70 million and $80 million. Its October goal is to close $100 million for the month, if "interest rates play ball," Barry said.
Currently, the company has call centers in Troy and Dearborn (the "mortgage mecca," he said, pointing out firms like Rocket and UWM, among others, are headquartered in the region), although it is considering adding loan officers through a profit and loss statement model.
How LitFinancial got here
Like some others, Barry expressed concern about the pace of change in real estate finance.
"Right now, there's
But with tokenization, Lit could offer new products to consumers with this type of financing because of the lower cost of capital.
It is a unique time in the markets, with the changes brought in by
"We're really looking to just change the way that we get access to capital, and it makes things cheaper, and it makes it easier for us to lend out to folks," he said. Similar to the way things are done today in the mortgage business, "the difference is the method in which you get the capital."
