The latest update of Sun West Mortgage’s Morgan proprietary artificial intelligence system allows for the use of open ledger technology, more commonly known as blockchain.
Morgan will now convert a pre-approved property-specific loan to a property agnostic tradable non-fungible token.
The NFT is backed by real dollars and guaranteed by Sun West. The lender said this approach empowers buyers and sellers in any income bracket with the ability to present and accept offers with certainty and without open-ended financing contingencies making it comparable to an all cash offer.
The mechanics behind a home sales transaction change. The homebuyer is now the seller of a NFT if the property owner agrees to accept the offer, Sun West CEO Pavan Agarwal explained.
In return, the NFT guarantees the seller will receive the proceeds of the loan.
“With the NFT it changes the dynamics of the trade especially now as we go into a buyers’ market,” said Agarwal. “It evens out the playing field for the sellers and the buyers, because there’ll be also greater transparency” in the transaction.
That includes buyers being able to see in the blockchain any other bidders for the property, while sellers can also track how many other property owners are working with that particular buyer, Agarwal said.
In broad terms, a NFT is a unique piece of digital data stored in a blockchain. It can be bought or sold and its ownership is also recorded on a blockchain. Sports collectables are one common use for NFTs.
Adoption of blockchain so far has been limited in mortgage, primarily with Figure Technologies in home equity lending. Figure has created a mortgage registry NFT to compete with MERS and it is also working with Sagent to bring this to servicing.
Starting with Morgan, “the whole transaction can be done completely online, it gets you to a point where transactions are just like buying a product on Amazon,” Agarwal said.
With the NFT the purchase contract becomes a smart contract, and the buyer’s earnest…
