As blockchain evolves as a fintech technology to look out for in the mortgage industry, a white paper by Premium Title makes the case for how, if implemented correctly, blockchain can ease automating the industry. It also looks at challenges that the title and escrow providers must overcome for this technology to be truly beneficial for the industry.
The white paper revealed that the title industry can benefit from four aspects of blockchain's technology:
- Transactional integrity - which allows a transaction to not change once it is logged on the blockchain. This is because blockchain transactions are confirmed and validated by getting cryptographically linked in blocks using hash algorithms that need to be changed in multiple blocks at the same time to change data.
- Security - Since blockchain data is stored on distributed ledgers called nodes across a network, they are continuously updated and kept in sync. As a result, tampering with data on one node would be quickly identified as an anomaly.
- Elimination of third-party intermediaries - The trustability of blockchain records would eliminate the need to use transactional intermediaries.
- Speed - Transactions related to the purchase and sale of real estate that sometimes takes weeks or months can be done in a matter of minutes through this technology.
Giving an example of how this technology's four benefits can help the title industry, the white paper said that multiple conveyances that are even referred to as the chain of title were "ripe for blockchain innovation."
However, it pointed out that while the industry could break new ground with blockchain, it would need to overcome some inherent challenges to really reap the benefits of this technology. One area would be "information on liens judgments, taxes, unpaid utilities and other matters that encumber the title of a property."
While blockchain solutions could capture all those transactions in an ideal world, many times "these liens and judgments only reference the name of the person. A key feature of a truly disruptive solution is referencing a specific property when these liens, judgments, and other title encumbrances are created in the first place."
The white paper pointed out that a usable platform must be created to search the blockchain for all transactions affecting a property for blockchain to be truly useful to automate the title process.
The report also gave the benefits and challenges to implement blockchain in the escrow process. It concluded that with the challenges the industry faced right now, it could take "many years of concerted effort to overcome the obstacles" for the technology to become a real disruptor for this industry.
Click here to download the white paper.