The mortgage lending industry has been using blockchain technology more and more recently, and this will only continue. This is interesting because there are many who don’t understand what blockchain is and or what it does. This revolutionary technology is shaking the mortgage process up, so it is important to have knowledge of it. We will take a look at what blockchain is, what it does, and the effects it has had on lenders and consumers dealing with mortgages.
Blockchain is a decentralized public network that allows companies and their consumers to securely store information and transaction data. Anyone who has access to the network will be able to view the information and the transactions. For consumers, the information they will be able to view with deal with their specific mortgage. The term blockchain also helps explain what this technology does. Blocks containing information are linked with a chain and every time a newer block is added, the previous blocks become harder to change if you are able to at all. Blocks cannot be deleted as the chains are permanent. This ensures data security and data reliability. Blockchain is usually associated with the dealings of cryptocurrencies, as it is the technology that many cryptocurrencies are built on, but it isn’t the only place where it is seen. Now that we understand what blockchain is and what it does, we can take a look at how this technology has affected the mortgage lending industry.
The three most notable benefits seen from the use of blockchain technology in the mortgage industry are more transparency between lenders and consumers, faster verification times, and lower information access costs. As I stated earlier, anyone who has access to the blockchain network will be able to view information and transactions regarding mortgages. This makes the mortgage application and maintenance processes as transparent as possible. The information added to the blockchain is also visible instantly to both parties, with verification times being extremely fast with blockchain. Lastly, information access costs are much lower because information held in the blockchain will not be owned by one specific party, so fees will not be added to the process. These benefits tell you why many lenders have adopted blockchain technology and why many others will in the future.
Blockchain is changing many industries and improving the security of their information. The mortgage industry has been no different and I look forward to seeing further developments with this technology. Who knows what other benefits can arise.
Written by Kourtney Manley, Business Analyst at OnlineApplication