I am Rushi Parikh, a real estate mortgage broker in Mississauga, and I have frequently been dismayed by the inefficiency and arcane processes in our home loan industry. Therefore, this is a technology I am extremely excited about for how it could bring all of our mortgages into the twenty-first century—blockchain and smart contracts. With this technology, borrowers should find it less burdensome to obtain a home loan.
Understanding Blockchain and Smart Contracts
Here is a short tutorial on what blockchain is and what smart contracts do before we discuss why either may be a good idea when it comes to mortgages. While the former is a distributed digital record of every transaction or occurrence on a network of computers that updates in real time, the latter is the terms of a contract written into the code enabling the same to self-execute.
Enhancing Transparency and Trust
The biggest benefit of using blockchain to update the mortgage business would be greater transparency than ever before, encoded in an immutable, cryptographically secure audit trail of every transaction and document relating to a home loan. Simply put, all parties—from the borrower to the lender to regulatory bodies to the real estate mortgage agent in Mississauga in question—can see the same information at the same time, instead of being locked in a battle.
Streamlining the Mortgage Application Process
Applying for a mortgage, by contrast, is horrendous, involving a lot of paperwork, so presumably some of those parts could potentially be automated using blockchain and smart contracts—things such as checking your income or your credit record and getting a property valuation. The sums for those can be checked against common or agreed-upon databases. And I say potentially because one thing we are talking about with blockchain and smart contracts is reducing some of the time taken with these processes, but also reducing the risk of mistake—as anyone who has managed data records manually knows, they are vulnerable.
Reducing Costs Through Automation
With blockchain, real estate mortgage agents in Mississauga like us will be able to automate many of the countless intermediary steps required to get from an initial mortgage application to a home loan approval. There is going to be significant savings in our operating budget. We are going to give a portion of those savings back to people looking to buy a home in Mississauga through mortgages that result in them having more money in their pockets through lower fees or lower rates.
Enhancing Security and Reducing Fraud
Perhaps the most typical example is in the mortgage industry, which contains some of the most intimate, delicate financial information one can expect to find, and the attention of certain kinds of fraudsters is especially attuned to it. The distributed, decentralized, and empowered nature of blockchains, coupled with the standard cryptographic protection offered by most of them, makes them largely immune to tampering and nearly impossible to breach via brute-force attack.
Facilitating Faster Closings
Long closing periods are probably the most frustrating aspect of the mortgage process for many of my clients. Smart contracts can conceivably make the closing process quick by automating much of it. Once all the conditions for the contract have been satisfied, money can be transferred automatically, as can the necessary items on a property deed. Depending on the jurisdiction, closing could take weeks, days, or hours. Call me to schedule a consultation with a real estate mortgage broker in Mississauga!