Blockchain has grabbed the attention of almost all industries across the globe. It is being seen as a promising technology capable of Transforming the Mortgage Lifecycle by enhancing mortgage process automation. Simply put, Blockchain is a digital database formed of “blocks” of information that connect to form a “chain”. Transactional data for each transaction creates a block with a unique identity, which joins the chain when it has been verified. What sets blockchain apart is that it is decentralized and easily accessible. We have also talked about the use of technology in the mortgage industry in one of our previous blogs.
Figure 1 - Benefits of Blockchain Image: https://assurancemortgage.com/how-blockchain-technology-impacts-mortgage-industry/
Blockchain and the Mortgage Industry
Blockchain can be a game-changer for the mortgage industry by radically transforming the mortgage lifecycle. It can greatly improve the buying and lending process for homeowners as well as financial institutions. Be it Loan Origination System, fulfillment, or Servicing. It is estimated that mortgage process automation using blockchain can result in savings of $177 million on a loan book of $97.7 billion for a typical lender.
The mortgage process has some inherent flaws that can be overcome with blockchain technology and mortgage process automation. There is a lot of paperwork and approval process required every time a transaction moves between ledgers. With blockchain and mortgage process automation, ledgers can be updated instantaneously. Reports suggest that the adoption of blockchain for mortgage process automation by national governments can reduce total transaction time from 40 days to 20 days. This will not only save time but also make all records transparent and traceable. Blockchain and mortgage process automation greatly enhances the lending process and makes it infallible. inflooens uses blockchain to make the mortgage process reliable and efficient.
Figure 2 - Blockchain in the Mortgage Industry Image: https://www.pwc.com/us/en/financial-services/publications/assets/pwc-financial-services-qa-blockchain-in-mortgage.pdf
Blockchain - From Loan Origination to Mortgage Servicing
Blockchain technology could be transforming the mortgage lifecycle end-to-end. With mortgage process automation using blockchain, there are many benefits that the mortgage industry can realize.
1. Accurate record-keepingConventional Loan Origination Systems require a lot of paperwork. This can be overwhelming for buyers as well as a hassle for lenders. Verification of income, assets, employment history is all a part of the process. With blockchain, all this data is collected as digitized records. This means that the records are accurate and the Loan Origination System gives information at your fingertips.
2. Lower costsBlockchain eliminates the need for third-parties. This is because transactional information is decentralized and accessible. There will be no requirement of fees for getting mortgage-related records. This would lower costs for buyers and enable them to interact with lenders directly. It can be said that borrowers would be attracted to lenders who have blockchain-based loan origination systems and processes.
3. Easier VerificationsWith conventional Loan Origination Systems and mortgage processes, homebuyers need to purchase title insurance in case there are any issues with ownership titles. Since blockchain stores all historical transactional data, it is easier to verify the chain of titles. Title insurance is not required and further lessens the paperwork as well as costs. For lenders, this would mean lower instances of fraud as the records would be digitally verified.
4. Mortgage Process Automation and Smart ContractsMortgage Process Automation allows lenders to create code-based rules for lending. These can be based on many factors like insurance, income, credit history, etc. If a buyer does not meet the criteria, the loan origination system will automatically reject the application. This reduces the burden of paperwork for loan officers and lenders and gives accurate and instantaneous approvals or rejections.
5. Security and ComplianceMortgage Process Automation using blockchain creates loan origination systems and mortgage CRMs that are more secure and compliant. With digitally verified records and approval processes, lenders can be sure of a single source of information. Record-keeping is one of the most important aspects of compliance and blockchain makes this process easier and foolproof. For more on how mortgage process automation is useful for Mortgage Audits and compliance read our previous blog.
Figure 3 - Traditional Mortgage Process vs Smart Contracts using Blockchain Image: https://www.cbinsights.com/research/blockchain-real-estate-disruption/
inflooens brings you the best of blockchain and mortgage process automation by delivering a convenient and superior mortgage CRM platform and loan origination system.
Where to start with Blockchain for Transforming the Mortgage Lifecycle
Blockchain is still an evolving technology and you need to be sure that the loan origination system or mortgage CRM platform you use is correctly leveraging this technology for mortgage process automation. You need to choose a mortgage CRM platform that streamlines the loan origination system and also enables servicing post-close. Being a new technology, it is natural for you to have questions about blockchain and mortgage process automation. Any new loan origination system or mortgage CRM platform should be easily adopted for lenders and loan officers. A robust platform will not only be actionable and empowering but also be discoverable and easy to use for loan officers.
inflooens mortgage CRM platform and loan origination system is your best bet for benefitting from blockchain technology and mortgage process automation. inflooens is transforming the mortgage lifecycle with an up to date and integrated loan origination system.