Fintech Startup Fluidity announced its plans to launch a project that will log mortgages onto the Blockchain network.
At the Fluidity Summit held on May 9th, the company released its schedule to develop the first Ethereum-powered mortgages in New York and California. The service is set to launch this summer and is expected to feature lower rates when compared to traditional loans.
The chief architect of Fluidity, Todd Lippiatt, said:
“We’ll tokenize the house, which will effectively take the collateral that is the equity of the house. You’re pledging the house and you get an advanced rate back in terms of dollars.”
The startup’s upcoming mortgages are expected to use Cryptocurrency and smart contracts for back-end management. Lippiatt said that Fluidity is currently looking for partnerships with Ethereum-centric lending platforms like MakerDAO’s dollar-pegged DAI loans.
Borrowers must submit online credit checks and all other essential information just like in any other online loan platform. Fluidity will then process the information and create a smart contract using a tokenized representation of the mortgage. The company can then package these loans together and resell them as securities via an exchange like AirSwap. Fluidity plans to offer cheaper rates compared to banks, with borrowers going through a process similar to a traditional loan.
The whole process provides the borrower with a quasi-traditional mortgage. The issuer and the subsequent traders are the main beneficiaries of this blockchain system functionality. Lippiatt noted that the demographics of the underbanked and low-income borrowers are a prime fit for such loans.
As reported by Bloomberg, a division of French multinational bank, Societe Generale SA has sold 100 Million Euros ($112 million) worth of Ethereum bonds backed by mortgages to itself. The bank had previously said that it was looking into how … Continue reading
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