Mortgages: A Perfect Use for Blockchain

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by Mish Shedlock, MishTalk:

There are excellent uses for blockchain. Here’s one I proposed years ago that is now in media discussion today.

Please consider Blockchain Eyed for Mortgage Bundling That Caused 2008 Crisis.

A group of big financial institutions wants to use the blockchain to help resurrect the packaging of home mortgages into securities, a business that almost destroyed the global banking system in 2008.

Credit Suisse Group AG, U.S. Bancorp, Wells Fargo & Co. and Western Asset Management Co. said Thursday that they successfully tested the distributed ledger technology as a way to make it easier to track securitized home loans.

“Structuring securities is complex, involving many different parties, manual processes, duplicated documents and data in different formats,” David Rutter, chief executive officer of blockchain startup R3, which is organizing the consortium, said in a statement Thursday. While the group is starting with residential mortgages that aren’t backed by the U.S. government, it plans to expand to other types of asset-backed securities. The next step is delivering a commercially viable product, R3 said.

“Distributed ledger technology will increasingly improve security around data, not just for capital markets but across numerous other industries,” Penny Morgan, global securities operations manager at Western Asset Management, said in the statement.

BINGO

Low-volume, high-worth transactions are perfect for blockchain. I proposed Title Insurance applications years ago. The entire Title Insurance industry and car title industry could easily be replaced by blockchain at a huge cost saving.

I expect both to happen.

Arguably Bad Uses

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