The First Crypto Mortgage Puts Conveyancers On High Alert – Blockchain Is Coming For Their Jobs

What does the word Mortgage mean?

It is basically a loan for people who want to buy a house but don’t have the money right away. This means they have to do a type of application to understand if they can receive this loan or not. In other words, it’s possible to say is a legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor’s property, with the condition that after the payment the title goes to the final owner.

Yes, it is a risky deal if you’re not sure how you will pay this debt, but the aim here is to explain why cryptocurrency can change in this process.

Another term that must be understood is “conveyancing”, which is the legal transfer of the property from one owner to another. This involves a conveyancing solicitor or licensed conveyancer who will act on behalf of the buyer to ensure their client receives the title deeds to the property and the land it sits on. This person will take care of all the bureaucratic parts, such as the exchange of contracts between buyer and seller, all the legal and administrative work.

The First Cryptocurrency Mortgage

In September of 2021, United Wholesale Mortgage, which is the first wholesale and purchase lender in America, announced it has successfully accepted the first-ever cryptocurrency mortgage payment in September and five more crypto payments in October from borrowers.

Which can start to become a trend now that cryptocurrencies are gaining more and more popularity.

Furthermore, because Bitcoin is a volatile coin, there are some channels such as Next Advisor, doubting this would be a good idea. How would United Wholesale Mortgage deal if in one month they received $1,200 and in the other $700? From my point of view, if a business decides to accept Bitcoin, they already know about its volatility. And is an action that shows the company is positioning itself for the future, even if they choose to go only with stablecoins, which would already be advanced in the sector, it is a smart move to test how it should work.

What Else Could Blockchain Disrupt?

Start accepting cryptocurrency means start using blockchain technology, and through blockchain, mortgage companies can start using smart contracts instead of having conveyancers as middlemen in the loan process. This also means the decrease of a lot of bureaucracy.

All parts of the deal between the lender and borrower, concerning dates, values, fines, and insurance could be programmed in a smart contract. So, the fact that United Wholesale Mortgage is considering crypto means a lot to the sector and even more to those who work as conveyancers.

The tendency of using blockchain is to remove the middleman of this world and make processes more direct. However, according to Andrea Gaggioli, as trust plays an essential role in affecting decisions when transacting with one another, it is important to understand how the decentralized nature of blockchain will impact individuals’ sense of trust. With that being said, it is also a psychological challenge, which depends on creating a trust management approach.

This logic can be applied not only to the mortgage but to loans in general, there is already cryptocurrencies that the main proposal is to act as a platform of loans, where you can be the person who borrows or lends, such as AAVE, which has a market cap of $4,399,196,564. From this, there is no bank or human to decide if you can or cannot receive a loan, the smart contracts of the platform manage this work, and in this case, it’s even more interesting because there is no big company behind it taking all the profits.

Conclusion

This is a young technology, and blockchain will definitely change some processes such as lending, and as replacement for paper-based and manual transaction processing in such areas as trade finance, foreign exchange, cross-border settlement, and securities settlement. There is still some time to understand how Web3 will change the way we do business and bureaucratic tasks, meanwhile it’s important to understand how to be prepared to surf this wave.

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