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Mortgage fraud is not the sexiest argument. At least, not until a crazed economic disaster linked to irresponsible and illegal lending practices – at the limit – to the 2008 financial crisis – makes mortgage-backed securities the key word.
For those not working in the real estate credit sector, the prevalence and consequences of mortgage fraud can be understandably disconcerting. But severe penalties for mortgage fraud exist for good reason – the problem is rampant, and the ramifications of widespread mortgage fraud can be destructive at many levels. Fraud relating to mortgages and real estate can lead to prison sentences of more than 100 years depending on the severity and enforcement has become more severe following the 2008 disaster, which has made the illegal mortgage practices questionable crime.
A problem that continues to worsen
Mortgage fraud has always been prevalent, since the real estate market is a breeding ground for opportunistic criminals. But with every measure, mortgage fraud is back on the rise. And according to CoreLogic the increase in applications showing mortgage fraud is likely to be a continuing trend.
"Last year we saw a relatively large increase in the CoreLogic domestic mortgage fraud index if the factors that influenced the increase continue, including a shift in purchase transactions. and the growing activity of origin of wholesale channels, it is likely that the risk of fraud related to mortgage applications will continue to rise, "said Bridget Berg, CoreLogic's Principal of Fraud Solutions Strategy. [19659002] Despite the persistence of chronic mortgage fraud in the face of the potential time of imprisonment, a weighted and effective solution has yet to be implemented. However, left to Block66, the blockchain would serve as a basis for a solution to eradicate mortgage fraud once and for all, or to any extent possible.
A solution based on blockchain
Block66 recently announced the creation of a platform that aims to reduce mortgage fraud by impregnating the process of origination of the mortgage with a strong dose of transparency and proof checks of tampering. Block66's blockchain technology will act as a hub for mortgages, functioning as a one-stop shop where borrowers' paychecks, financial information, tax records and personal identifiers are accessible to the parties who request them. By deriving these documents from their original sources and storing them on the blockchain, the platform will represent an immutable, reliable and interoperable resource that is much less vulnerable to fraudulent actors.
"We have created Block66 to offer new opportunities for borrowers and end the time-consuming and paper-intensive processes in the mortgage industry," said Joe Markham, Block66's founder and CEO. "Our platform will make it easier for everyone to find what they need, so mortgages can be approved and funded more quickly by storing the chronology of each transaction on the blockchain, we will provide a valuable audit trail for creditors, which will help to mitigate fraud on mortgages. "
As pointed out by Markham, in addition to transparency, the other element of a blockchain platform of mutual origin is the speed of the transaction. At present, the processes of verification and approval of mortgages are bogged down by obsolete systems that require the transmission of paper documents between the parties, which is entrusted with the task of determining whether the figures are accurate and the information is true. Yet even though these processes routinely take 30 to 45 days, they eventually proved ineffective in controlling fraudulent applications at any acceptable level. For this reason, Block66 proposes a change from the bottom to the top in the system, avoiding seemingly endless documents for a simpler and more transparent system based on blockchain technology.
Mortgage fraud puts credit institutions, brokers and borrowers at risk and can also artificially increase house prices in a market, indirectly influencing other potential beneficiaries. Unfortunately, commissions from home sales and mortgages and the dream of owning a home are incentives for dishonesty on both sides of the lender's desk. If there was not a strong reason to overestimate income, assets and employment, such a scourge of mortgage fraud would not exist as it does. But the criminal minds who use straw shoppers to buy houses are not to blame only for such a widespread problem. This is even more a reason why a system with blockchain level control is needed.
Hope for the Future of Mortgage Credit
While no one says who wants to experience a repeat of 2007 -8 financial crisis, to date little has been done to ensure that no other disaster occurs. Even the most well-intentioned efforts have failed, as evidenced by the renewed increase in mortgages. But Block66 hopes that, considering the stakes in the real estate credit sector, the adoption of their platform and similar ones will become widespread. Block66 is seeking to incentivize participation through tokenizing securities, allowing small credit institutions a liquidity measure.
"The idea behind mortgage tokenization is to introduce smaller lenders," said Markham. "They are often reluctant to bind to longer repayment plans but are more willing to lend to customers who are not always favored by traditional banking institutions, even if they are creditworthy."
Actually, the blockchain The platform based on the fact that Block66 will finance through a Token Generation Event (TGE) on Thursday 6 September represents a radical change from the status quo. However, if there is a problem for which an external solution is required, it is a mortgage fraud.
