Once the loan has been approved, the applicant will receive an encrypted key to sign the offer. The buyer's signature record becomes a special block that is attached to the chain. The next move is to pass the loan funds to the borrower.
Fremont, CA: A simple way to explain blockchain technology is to utilize it as a decentralized, interactive, distributed ledger or database. Blockchain technology consists of three components:
• The record
• The Block
• The chain
The record could be any kind of transaction. The record includes all the details of the transaction, such as the purchase number, who was involved and what they purchased. It also contains the digital signatures of each person concerned.
How Does a Blockchain Mortgage Work?
Let's take a look at an example. Supposedly, the home buyer has already been qualified for a mortgage. They have found a property they want to purchase. They fill up the mortgage application and it becomes a block. Any party that is part of the mortgage process gets access to the block, and the information in the application is checked almost instantly.
Once the loan has been approved, the applicant will receive an encrypted key to sign the offer. The buyer's signature record becomes a special block that is attached to the chain. The next move is to pass the loan funds to the borrower. The transfer of funds also becomes a block in the chain, as does the transfer of the title. The process of getting approved for a mortgage and settling for a loan just takes days, rather than at least a month, leveraging blockchain technology.
After a mortgage has been approved and settled, blockchain technology still has a part to play. Mortgage servicers may utilize the blockchain to track payments from borrowers. If a homeowner wants to refinance or sell the house, blockchain will help confirm the ownership of the property. If a mortgage company wishes to sell its loans to another company, blockchain will help businesses confirm that the original servicer has a claim on those loans.
