For most of the past decade, home ownership and mortgage banking have had a souring effect on most people. Ignorance and maleficence on a colossal scale helped created one of the most inflated housing markets in history. When the housing bubble burst in 2008, it thrust the entire world economy into a recession that would require most of a decade to recover from.
This week, a startling chart and pictograph by The New York Times gave credence to the desperate scope of the problem.
Although the economy is roaring once again, the housing market continues to struggle. New home construction is at its lowest level in decades, and first-time home buyers are finding it exceedingly difficult to attain affordable housing in the tight market. The Wall Street Journal is calling it “the next housing crisis,” and it’s undoubtedly garnering a lot of attention from pundits, politicians, and ordinary people.
All of this negative coverage has overshadowed another problem in the mortgage industry: its ridiculously outdated and inefficient processes and technology. Although we are living in the center of the digital age, mortgage companies remain a paper-based initiative that requires considerable effort from the borrower and the lender. What’s more, the currency lending industry involves an abundance of third-parties that complicate the process, and they add to the already costly expenses of purchasing a home.
Housing is critical for human flourishing. It’s one of the first needs that people possess, and it’s a constant preoccupation for many people. Not only is a thriving mortgage industry essential for homeowners, but it has implications for the entire economy as well.
For the mortgage industry to truly thrive, it should be employing the latest technology to make it the most productive, efficient, cost-effective, and secure process possible. The newest technology, the blockchain, is allowing new platforms to create innovative solutions for our most pressing problems.
Introducing Homelend: A Blockchain Solution for the Mortgage Industry
Homelend is a blockchain-based, peer-to-peer mortgage lending platform that harnesses the power and potential of the blockchain to create a transformative and disruptive platform for the lending industry. The company is the brainchild of Itai Cohen and Netanel Bitan who respectively serve as the company’s CEO and CTO.
The platform is hosted on the Ethereum blockchain, and it offers several technical advantages over the current, stagnant mortgage system. Much of the mortgage process involves the transfer and verification of information. The blockchain is especially adept at handling these tasks, and Homelend puts it to work on the housing market. By tokenizing information and utilizing smart contracts, the lending processes can be quicker, easier, and more transparent. This is good news for an industry shrouded in complication and secrecy.
The current housing market is making it increasingly difficult for millennials to find affordable housing options or to obtain the loans necessary to purchase their first home. According to a 2017 report by USA Today, millennials are hindered by the extremely high cost of living in the urban areas that they populate and by their inability to procure a down payment for their first home. In other words, it’s a systemic problem that requires more than a Band-Aid solution. It needs an entirely different process.
Homelend represents an alternative and efficient method for attaining financing. Using the blockchain, the platform allows borrowers to crowdfund their mortgage, and it will enable investors to efficiently judge and manage the risk of supporting these endeavors. It opens up an entirely untapped mortgage ecosystem that can help unclog the tap that is currently running dry.
This can benefit both borrowers and lenders as it broadens the spectrum of possible lenders. Using predictive technology, Homelend provides tools for lenders to make a sometimes-volatile industry significantly less volatile. When combined with the platform’s improvements to speed and efficiency, it presents an entirely new look at the antiquated mortgage industry.
The housing industry is a critical component of the economy. It doesn’t just drive the job market and the stock market. It is the method by which people attain one of their most basic needs. As everyone struggles to adjust to a post-recession housing market, new technologies are producing new opportunities for lenders, borrowers, and everyone in between. The blockchain may have been popularized by its role powering the most successful cryptocurrency, Bitcoin, but its reputation is being garnered as platforms like Homelend use its technology to bring fresh solutions to aging problems. Their decentralized mortgage network is a serious step toward a genuinely flourishing housing market.
The author Payel Dutta
Happy soul, fond of travelling and loves to read tech columns.