Blockchain Applications in Real Estate Finance: Mortgage Origination, Securitization and Servicing

Description

Blockchain has begun to revolutionize commercial and residential real estate finance and the manner in which transactions are closing continues to change today. Early pioneers using DLT and Blockchain technology have developed a wide range of applications which have survived pilot programs and continue to be used in commerce today. A single Blockchain can embody all transaction information in one digitally-shared, electronic document with transaction participants each getting appropriate credentials.

This means that closing real estate transactions is a far more efficient, trustworthy and rapid process relative to the Old School method which we as practitioners believe will eventually go the way of wall-mounted rotary phones and Blockbuster Video stores. The question is not if this will happen, but when. As a more trustworthy process, the ledger is updated and viewable simultaneously by members of the network with safeguards against tampering. Whereas mortgage origination via DLT/Blockchain has already begun in leading markets, mortgage-backed securities (MBS) and A/B structured loans are also particularly well suited for DLT applications. Over time, the traditional escrow will become obsolete as well as other functions that we all see, use and accept today -- and this webinar will bring that into sharper focus.

Today's securitization process involves review by broker-dealers, issuers, investors, accountants, attorneys, rating agencies, and trustees. Similarly, loan participations involve multiple lenders and servicers. Blockchain technology has already been proven to be an accurate and trustworthy digital representation of the underlying loan, as well as copies of all origination documents, loan documents, and payment history ---all accessible in real-time.

We are seeing today eMortgages, eNotes and the beginnings of smart contracts such as interest rate swaps and caps accompanying electronic legal “documentation.” All of this enhances and benefits from the transformative qualities of Blockchain. In addition to automatic notification of any loan-related event, smart contracts can make automated payments to all loan participants based on the waterfall provisions outlined in the pooling and servicing agreements. We are especially mindful of the legal issues arising out of eMortages and eNotes as well as the custody arrangements of these new forms of legal arrangements. Drafters of the Uniform Commercial Code and policymakers supporting a range of statutes and implementing regulation have begun their work and it’s up to the speakers in this webinar to help participants spot issues and keep up with the evolving law.

Listen as our authoritative panel discusses the architecture of DLT and potential applications of blockchain in the commercial lending context, with a particular focus on MBS and transactions with multiple participants or senior-subordinated structures. The panel will also discuss regulatory and data security concerns with implementing blockchain.