Redwood Trust has made an unquantified investment in Liquid Mortgage through its new technology venture arm, signaling that it’s going further in its tests of
The real estate investment trust’s interest in blockchain is significant because it’s a closely watched and influential player in the private securitized mortgage market. Redwood was a pioneer in helping to re-establish that market after the Great Recession exposed risks related to tracking asset performance and ownership.
Those are exactly the kinds of risks an indelible digital ledger like blockchain could address if the mortgage industry could find a manageable, cost-effective way to put one in place. Redwood may have found a way to do that, according to a company announcement.
“By initially refining our focus to the post-origination investor market, unique advantages of the technology can be used more quickly to improve underlying infrastructure for the entire industry,” Redwood noted in a paper that it released with Wilmington Trust on Monday.
Finding a way to implement blockchain systemwide in relatively short order has been a key challenge because experts have maintained that its benefits won’t be fully realized until most lenders have the capacity to use it.
To that end, Redwood is specifically experimenting with an “originator agnostic” approach, which would allow lenders to utilize blockchain when selling loans into the REIT’s securitizations.
So far, Redwood has been able to place all loans from one of one of its recent Sequoia securitizations on a blockchain in a test environment, but it hasn’t yet rolled out the technology for broader use. It is, however, inviting inquiries from companies interested in helping with its tests.
While Redwood has described the roadmap it’s drawn up for blockchain implementation with Liquid Mortgage as exclusive, it is by no means the only mortgage firm in the market working on ways to implement this kind of technology.
Other recent examples include online lender
