A subsidiary of Redwood Trust yesterday CoreVest Announced $ 313 million securitization backed by a single-family rent (SFR) loan. One of the distinguishing features is that loan payments are tracked using blockchain technology. Liquid mortgage.. This means that investors can view their loan payment activity daily.
Last April, Redwood Trust funded the Liquid Mortgage seed round in a private amount.
Fred Matera, then Head of Housing at Redwood Trust, said: “The mortgage market is, in many ways, the“ holy grail ”of blockchain technology, but the complexity and nuances of the mortgage business make it extremely difficult. It cracks. Our view at the Redwood Trust was to use blockchain as a tool to streamline and evolve the existing mortgage ecosystem. “
Liquid mortgage solution
Returning to loan payments without this blockchain solution, investors will usually only have their payment data available after 6 weeks. Currently, waterfall-based payments to securitized investors will continue to be paid in the normal time frame of the following month. However, early receipt of payment data allows investors to assess performance and increase the transparency of asset-backed securities transactions.
Liquid has integrated its solution with a single mortgage service company to obtain payment data. The platform uses the Stellar public blockchain, but does not store personal data on the blockchain.
Apart from sharing payment data, Liquid Mortgage’s platform is useful for tokenization and due diligence.
Each loan that underpins securitization is a digital asset in your wallet. When the user repays the loan principal, the wallet balance decreases to match the loan balance.
Given that mortgages are an asset and therefore change hands when it comes to due diligence, validation is usually done every time a mortgage is resold.
For example, the original loan document, which is usually written on paper, should be checked for integrity and accuracy. Loan-related data is often entered manually, and someone needs to verify that the data matches the content of the document. This task is delegated to the due diligence provider.
Documents and data can be recorded on the blockchain using digital fingerprints or hashes that do not leak private data. Therefore, you can verify that the document and the data are the same as the original data by simply verifying the hash. Therefore, you only have to pay the due diligence provider when the loan is started or modified.
Other companies using blockchain for mortgage-backed securities (MBS)
Liquid Mortgage is not the first company to explore the mortgage blockchain.One of the most well-known figures in the mortgage-backed securities (MBS) sector, Luis Lanieri partnered with blockchain company Symbiont for a mortgage solution on a project in 2016. Announced in 2018.. When I talked to Symbiont last year, the project was in an advanced stage. Symbiont’s solution focuses on the asset services side of things, so it tracks payments and analysis of MBS performance.
Another company involved in this area is Figure Technologies.Previously released Asset investment security It is based on a HELOC loan whose data is stored on the Provenance blockchain.Also, the solution Mortgage registration Instead of MERS. In addition, some Chinese banks issue mortgage-backed securities using data tracked using blockchain.