Blockchain is revolutionizing the world as we know it. Almost all industries now have an application for this technology and as the digital transformation accelerates, you can expect to see more as time unfolds.
Another revelation made by blockchain developers is the possibility of assisting the mortgage lending sector. Can you imagine your top mortgage lender using this technology to secure a transaction or contractual agreement? That will become a reality and disturb both the real estate and financial industry.
Here are three applications that serve as proof of this glorious collaboration and future expectations of blockchain in the mortgage lending sector:
Reducing paper trail and weeks of due diligence
When applying for a mortgage, there are many papers to fill in and that process usually takes weeks to process. A need was then identified for an innovative solution that will expedite this crucial process without being inaccurate or fall short in any way. Blockchain availed itself with the Distributed Ledger Technology to provide a quick validation and conduct due diligence in far less time.
With blockchain technology, applicants will only fill in fewer papers for their applications to be processed. There are many steps involved in a traditional mortgage application that make it take longer one of those steps is gathering supporting documentation. Keeping all these documents in an easy to find and access location can be very convenient. That can be done using the building blocks of the blockchain.
Mike O’Connor, who works as a blockchain essay writer, says that once a block has been created, it will stay there permanently. Whenever new information needs to be added or edited, a new block is created to prevent tampering. The results are a quick and easy method of finding all the information needed to process a mortgage application with a very limited paper trail.
One of the most prominent examples of reducing paper trail with blockchain is the Bank of China. The financial establishment uses blockchain innovatively by processing 85 percent of property valuations with this technology. It does not only reduce the paperwork involved but also improves transparency and expedites this process.
Adopting this technology for this company has reduced their time of appraising property to just a few seconds. All results of property valuations they are mortgaging are available instantaneously to customers. Hopefully, soon they will be processing 100% of property valuations using blockchain for a faster and more transparent strategy. There are also quite many startups emerging in the U.S offering this very service.
Although it has not been used at scale yet, hopefully soon enough, blockchain technology will be used to process mortgage applications at major financial institutions.
According to tech experts at Essay Writer, a premier assignment help service, doing so will make these applications much more efficient and pleasant, especially amongst the customers. Above that, employees will also be relieved from the tedious work of gathering and processing all necessary documentation for a mortgage application.
Eliminating the need for storing data
As the years go by, more documents will be gathered and might deplete the procured storage leading to more expenditure to meet the growing demand. Not to mention other problems such as ease of tampering with the documents. Blockchain technology helps resolve all of these problems because data is stored on the platform and accessed at any time.
Since it is stored using blockchain, it is decentralized. Thus, businesses avoid paying hefty bills for storage. Also, since it is locked permanently on the blockchain, it is safe from being tampered with. All of these satisfy privacy policies and pose little to no legal risk regarding cyber and confidentiality threats.
In the long run, the cost savings are quite considerable and make using blockchain technology a cost-savvy strategy. Customers will also be much more at ease to use the services of mortgagers implementing blockchain technology in their process.
In Russia, a branch of Raiffeisen Bank International used a blockchain platform, Masterchain, to issue a completely digital mortgage. Russian banks have been developing this decentralized depository system since 2016 and it has proven to work seamlessly.
There is very little data stored by Raiffeisen Bank International. Instead, all crucial details can be accessed on the platform. Those details include the parties involved in the mortgage, the loan, and how long it is expected to be paid up and the property in question. They use what is called tokenization, which stores all the details after the mortgage has been verified.
Other countries are also following suit and trying to identify methods of integrating blockchain into their real estate mortgage systems.
Using this technology can make applying for a mortgage a stress-free process for all parties involved. Furthermore, it will also reduce the liability of implementing cybersecurity measures and trying to remedy a successful attack.
Smart contracts remove intermediaries
Blockchain has unlocked what is now known as smart contracts that remove many intermediaries that make the application process longer. Smart contracts have fail-safe protocols that ensure both parties will hold up their end of the deal. Failure to do so leads to immediate termination of the contract.
These smart contracts can be used by financial institutions and individuals applying for mortgages to make their contractual agreement safer and transparent.
Smart contracts follow up on the obligations of the agreement without any third-party intervention. All security concerns surrounding smart contracts are addressed by blockchain’s secure network that cannot be hacked.
Hence, the contract cannot be tampered with in any way and ensures that it is executed just as it should. Smart contracts also make the process much faster and run seamlessly with very limited difficulty.
Bank of Communications, the 5th largest bank in Mainland China, issued digital mortgages worth $1.3 billion using blockchain. Undoubtedly, this Chinese bank has secured its systems to a greater extent and ensured on fulfillment of contractual promises.
Using this technology in this capacity can help boost the mortgage industry and make companies using these systems thrive. It also helps customers trust mortgagers better because all processes become transparent and contractual terms are communicated transparently. Both parties benefit from this arrangement and enjoy an expedited process without a lot of third parties.
Many other countries can be expected to follow the example of the Bank of Communications by offering digital mortgages with smart contracts. Doing so will decrease fraud and make the process much more convenient for all parties involved.
These three applications of blockchain indicate how close this technology is to revolutionizing the mortgage lending sector. In some countries, there are currently banks and financial institutions piloting technologies such as smart contracts and completely digital mortgages.
Soon, you can expect the scaled implementation of blockchain technology in this capacity. Implementing blockchain technology will help make the process of applying for mortgages much simpler and efficient with very little disturbances. Also, it will expedite the average time it takes to process such applications.
Michael Gorman is an academic writing and editing pro working with online assignment help in Adelaide, regarded as the best custom essay writing service in the academic field. He also works part-time for Superior Papers, the best cheap paper writing service that’s also known for its thesis and dissertation writing. Besides writing, he has a great passion for online tutoring and mastering new languages (he’s currently learning German).