Is there a blockchain in mortgage servicing's future?

By:Elina Tarkazikis
Elina Tarkazikis is a reporter for National Mortgage News.

Servicers continue to face data management challenges, particularly during loan onboarding and transfers. Blockchain technology may hold the key to resolving those issues.

With blockchain's ability to streamline data distribution procedures, the technology could help make servicing processes more seamless.

"What if in the future, all originated loans automatically end up on a blockchain? Payments, taxes, insurance, electronic transfers — with no involvement of people?" Sapient Global Markets Director Brian Martin asked while addressing the Mortgage Bankers Association's Servicing Conference in Dallas earlier this month.

"At this point it is entirely conceivable that the entire servicing industry could be replaced by a blockchain," Martin said.

As technology trends toward intelligent automation, rules and descriptive analytics can be used to guide processes like foreclosures along without the need for repetitive human intervention. In other words, if servicing tasks can be distilled to purely operational over functional, then technology can replace many of the manual tasks that are costly and can ensnarl servicers in regulatory compliance issues.

What makes blockchain technology so promising for servicers is the way it facilitates efficient data management.

"The problem is not transporting the data by itself, the security or the privacy of that data, the integrity — it's none of those things by themselves — it's when you put all of those together, in this perfect storm of emerging technology that we have that increases the value," explained Martin.

"We've got servicers, GSEs, originators, all trying to engage in what is practically sharing data, transportation of data, reporting regulatory laws — you have to have a secure movement, and in servicing you have this natural fit," he added.