Moody's: Blockchain Can Simplify the Mortgage Process

April 13, 2018

International rating agency Moody's published a report in which it says that blockchain technology can make the mortgage process simpler and greatly reduce costs.

The company notes that since the 2007 mortgage crisis, innovations have greatly affected and changed many US industries, but not the housing sector, to which they had almost no effect.

The report says that this creates an opportunity for the use of blockchain technology, that can accelerate the mortgage process, make it easier, and reduce costs. As an example, the report says that blockchain technology can make the process fully transparent throughout its lifecycle, which will allow mortgage insurers to transfer mortgage credit risks to reinsurers and other capital providers in a more financial effective way.

The company notes that blockchain technology can also reduce the amount of required personnel for the mortgage process. This can reduce the amount of fees by 10-20%. Researchers estimate that this can save from $870 million to $1.7 billion a year.

At the same time, the company also pointed out negative aspects of the potential implementation of blockchain technology. Moody's distinguished the small block size as one of the problems, saying that this limits the number of processed transactions. The company also thinks that the cost of using the technology is also high.

In conclusion, researchers wrote that in order to implement blockchain technology into the mortgage industry, it must be approved by financial regulators, who does not want to expose the industry and citizens to additional risks. Therefore, the will not approve it as far as they are not confident in the technology.



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