January 2017 - The World's Local Bank

TheMReport — News and strategies for the evolving mortgage marketplace.

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12 | TH E M R EP O RT SPONSORED CONTENT Will Bitcoin Change the Mortgage Industry? N o. That's crazy. But blockchain—the underly- ing technology behind Bitcoin—will have a huge impact. The most important feature of Bitcoin isn't the currency but the distributed ledger that keeps track of the currency. The blockchain is an entirely different recordkeeping tool that makes it impossible to change the past and is being used in the mortgage industry to solve even more interesting problems. This new technology and its fundamental concepts will even - tually be applied to almost every system and industry to streamline and secure the coordination of shared information, systems, and infrastructure. Blockchain technol- ogy isn't just a better, faster, and more-secure technology. It is an entirely different way of solving business problems. Just as social media shifted the way we con- nect, communicate, and receive our news, blockchain will change the way we manage our business and records. The mortgage process is likely the single messiest, over-audited, and over-documented example of business records in all of American history. Mounds of paperwork, hundreds of regula- tions, and a spider web of parties, all coordinating over an extended period of time, have created a mess, even when it is done right. This environment has escalated the costs to an unsustainable level. Mortgages average over 500 pages today, which translates into five trillion new pages generated annually. There are also many dif - ferent parties all collaborating on the creation, auditing, and upkeep of each file. Over the eight-year average lifespan, the documenta- tion of a mortgage becomes an enormous challenge to manage and the requirement to dive back into the file years after closing become a nightmare. This is where Factom comes in. Factom's technology uses the power of the blockchain to man - age the mortgage documentation, data, and audit trail. Factom's blockchain technology will dra- matically cut cost, reduce audit time, and lower the inherent regu- latory and legal risks for mortgage origination and servicing. Factom's blockchain allows the lender to snapshot the data and documentation for a loan at any point in time. Once the snapshot is taken, it is simple to look back to any point in time and review why a specific decision was made on a file, who was part of that decision, and where the underlying document or data files that supported that decision are located. The best part is Factom's blockchain will stick around forever so when a file is several years old and stretching across many systems, you can go back and audit it as if the file was closed yesterday. It's not magic but it will feel like it. Blockchain, like social media and the internet, is simply changing our paradigm for solving problems. Factom's blockchain when applied to document management creates an entirely new way of thinking about tracking, managing, and retrieving documents. Without ever touching private data, Factom creates an index and digital finger print written into an unalterable history. The records are both permanent and dynamic. Reviews of the file feel like scrubbing a videotape. Just rewind to any point in its history to know what happened, making it easy to see what went into every decision. The Factom system makes sure the original documents don't get lost, confused, or overwritten by updates. New information is easily appended so it is clear where it came from, who added it, and where it is stored. Factom organizes all information shared by multiple parties simultane - ously and permanently. This is an entirely new way to think about managing documents and compli- ance. To quote William Gibson –"The future is already here—it's just not very evenly distributed." plywood Gov. plywood law-

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