Block66 is shaking up the mortgage industry by providing a fully transparent and comprehensive lending experience.
The upcoming network is a matchmaker connecting borrowers with lenders. No longer will prospective homeowners be solely reliant upon local banks and credit unions.
Blockchain tech can break the bricks of walled gardens surrounding exclusionary industries. You may remember how high-risk loans — coupled with rising housing prices — were so instrumental in the last global financial collapse?
Well, putting the mortgage industry — often prone to predatory, shady, profit-hungry practices — on a chain is long overdue.
But before we get into how Block66 plans to straighten a crooked walkway, let’s ensure we understand each other…
Disclaimer: This is not investment or financial advice. I’m not a financial expert by any stretch of the imagination. Most information within this article is speculative and merely my own personal opinion. Always conduct your own research before contributing to any startup projects.
Always remember that what you do with your money is your decision to make. And if that decision proves too difficult for you alone, seek guidance from a financial professional.
I may or may not receive a small allocation of tokens for creating this content. That said, I will do my best to remain unbiased and fair. I try to avoid all FOMO and FUD and never wish to impart those emotions on my fellow crypto-heads.
A House Full of Problems
The mortgage industry is in such a state of disarray that it’s tough to pinpoint where we should start. The industry can be classified as a fixer-upper that needs lots of work.
But we must start somewhere…
First, we’ll examine some of the mortgage industry’s shortcomings. And then we’ll take a look at how Block66 is using blockchain tech to mop up the mess.
A Flood of Paperwork
If you’ve been there, you know. Buying property is NEVER easy. Bring extra pens when you meet your realtor because you may just run out of ink.
But then again, you’re in a realty office that’s swimming in pens. Daily Amazon deliveries ensure they never run out.
Sure, blockchain tech improves efficiencies and drastically trims costs. But disintermediation — reducing the need for a middleman — takes everything up a few notches.
In this case, home buyers don’t need a realtor to facilitate a loan on their behalf, taking a cut in the process.
The entire process can occur via smart contracts. Thanks, Chrissy, you’re wonderful but I’d rather tokenize my loan.
Have you ever been in the depths of escrow paperwork hell? I have and it’s ridiculous. Hurry up and sign this so you can wait weeks for a decision.
Oh, you were just here in our office yesterday? Come on back today and give us more of your initials.
A digital immutable ledger rather than a pile o’ paperwork is natural progress for the mortgage industry. And recording data on the blockchain rather than fallen trees is, thankfully, increasing in popularity.
However, there’s much more at play here. The blockchain-powered benefits run deeper than avoiding cramped, ink-stained hands.
But before we continue, let’s get you familiar with what Block66 aims to accomplish:
“I’m late to wait!”
Solid idea, don’t you think? Blockchain tech excels at exposing the deception within any given market. And the mortgage industry, while certainly reluctant, is long overdue for a shakedown.
Skittish Lenders
The likes of Wells Fargo, HSBC, Chase and their ilk are becoming a little too afraid of taking risks.
Even if you have ‘average’ credit, they tend to be unwilling to extend an offer. In their eyes, jumbo loans are better fitted for elite, power suit-wearing rich folk.
Let the middle-class toil away in their shared-wall apartment buildings, they say. Let them struggle to find parking and walk blocks at a time with groceries in hand.
Let them hear every word the neighbors say whether they want to or not. Let the downstairs tenants think a herd of elephants lives upstairs. Let them be subjected to the neighbor’s kid pressing his face on their screen door while loudly projecting his voice into their apartment.
I think you get the idea… apartment living can be uncomfortable.
Reserving home loans for high-credit lenders can weed out some of the fraud and deadbeats partially responsible for the ginormous financial mess of 2008. Problem is, many trustworthy borrowers are getting left behind.
If you don’t overextend yourself with debt, have a “stable” job — although I’m not sure there’s a definition of that anymore — and have proven yourself capable of meeting payment deadlines, you should have the right to own a home.
But you’d better be sure of it first…
Reality Check
Just a quick sidebar on the idea of owning a home. The notion can be downright romantic.
You may not want a white picket fence but the promise of doing things your way is very enticing. It’s a lifelong dream for some people.
But many prospective home buyers are never told the truth. Aside from the time spent doing everything yourself, hidden costs abound.
In addition to your monthly mortgage payment, count on up to 50% more for insurance and maintenance.
So, if your payment is $2,000/month, your actual costs may be closer to $3,000.
And, things go wrong all the time. You can’t even buy insurance for fun stuff like the pipes under the house. All of those costs are on you if they bust.
Make sure you can truly afford that mortgage before signing with emotion. Avoid FOMO. The French didn’t name the term “death gamble” for nothing.
Underestimating the actual expense of homeownership is an easy way to get yourself rekt.
No Vacancy
There are lenders out there who are more willing than big banks to take chances on people. They know that higher risk equates to the potential for higher rewards.
They also monitor needs on an individual basis rather than blindly discriminating based on income and a credit score.
But these lenders are hard to locate. Which makes it tough for them to compete with big banks. And if creditworthy lenders can’t find them, all those interest payments will flow elsewhere.
Which is sad because given the choice between a greedy bank and a private lender — assuming identical interest rates — I’ll go the private route every time.
The Boondocks
Geography plays a key role in determining the style of loan a borrower can acquire. If you’re in a developed country, so long as your credit is decent and you can put 10% down, you can probably find yourself a loan at a reasonable rate.
But what if your country is under-developed or your credit’s on the lower side of average? Or maybe you don’t have the full 10% down payment? So sorry, your chances of securing a loan are minimal.
Merely being born into a location’s economic scenario can make or break your chances of becoming a borrower.
Even if you’re somewhat wealthy, your region’s lack of proper banking infrastructure can make loan procurement ultra difficult.
Just ask the residents of India. As referenced in the project’s whitepaper, many who can truly afford a home never score themselves a new set of keys.
Old Construction
By definition, the fact that realtors prefer an in-person signature session is seriously old-school. Sure, I can understand the desire to provide a personal touch.
But do these people not have access to the Internet? We spent enough time together when we were viewing properties, thanks.
The next time you want to buy something on Amazon, will they make you go to their warehouse and manually enter your credit card information 37 times before checking out? No, they won’t. That’s not how it’s supposed to work.
It’s time for the home-buying process to join us in the modern age…
Blockchain Renovations
Wow, 2018 Mortgage Boulevard is a dump. A fresh coat of paint isn’t going to cut it and we can’t do it all by ourselves.
We’ll need a team of experts to rip-out and replace the entire foundation. Ready to get started? Let’s put on our work gloves and get to it then…
Blockchain tech ignores geographical boundaries
Knocking Down Walls
By using the Block66 platform, borrowers don’t have to wish and hope neighboring lenders can help them out. Instead, they can go shopping for loans across the entire globe.
Loans will be tokenized, which means they can be divided. A borrower doesn’t need to get a lump sum from one entity. There’ll be a crowdfunding aspect in that loans are divisible.
If a borrower asks for $100K, the loan may very well get funded by a dozen different lenders. Can you smell the fresh aroma of decentralization in here? Nice, isn’t it?
Rebuilding Pipelines
The mortgage industry’s plumbing moves slow. It’s clogged with big fish and borrowers have little room to move around.
By clearing the way and creating free-moving, blockchain-based connections, Block66 hopes to attract a wide range of lenders.
The network will be available to banks, credit unions, high net-worth individuals, private lenders, and mortgage investment corporations.
Building an expansive, diverse, global network of lenders will give borrowers a massive increase in choices compared to what’s available now. And that equates to a massive increase in the likelihood of getting home loans funded.
Adding a Personal Touch
The Block66 network’s algorithms will match a borrower with the top 3 choices that best fit their needs.
But, taking it a step further than top-level rates and terms, borrowers will be told why those specific lenders are the right choice for their individual circumstances.
Think of the UI as a smart search engine for loans. Plus, it’s as if you’ve already pre-clicked — those annoying ads that follow you all over the Internet are no longer ads, they’re baked right into the search results.
Everyone’s Invited to the Housewarming Party
Borrowers on the platform enjoy premium access to loan opportunities that can fulfill their dream of owning a home. But Block66 isn’t all about the borrowers. The space’s other players get to have fun, too.
Mortgage brokers get an all-encompassing interface that matches them with lenders while providing access to credit scores and property appraisals.
And lenders big and small can perform audits and secure mortgages within a growing pipeline of borrowers.
Assuming the Block66 grows as expected, we should see an industry-wide shift to blockchain solutions. Who doesn’t like doing things cheaper and faster?
Final thoughts…
Buying a home, especially for first-timers, is a daunting experience. It’s long and exhausting and may make you want to halt your search and settle for the apartment life.
You also need to strike a balance between credit and affordability. Blockchain or not, your worthiness — rightly so — will be thoroughly examined. That’s unavoidable but the blockchain can streamline that process, and more.
Block66 aims to simplify operations across the entire mortgage industry. The team chose to focus on more than one segment of the market. Ambitiously, they chose to offer industry-wide upgrades for everyone involved.
By bringing transparency to the global $33T mortgage space, Block66 is creating a win/win scenario. Borrowers, brokers, and lenders alike can realize more options leading to greater opportunity.
The industry is certainly large enough and disheveled enough to support tokenization. And it won’t take much market share in order for B66 tokens to gain traction.
The network’s MVP isn’t set to launch until Q1 of next year. So, for now, we’ll just have to wait and see if Block66 has the right blueprint for constructing a successful mortgage lending platform.
Here are some resources for you in case you’d like to dig deeper into the project on your own:
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