Why blockchain technology is helping to make home buying cheaper and safer • TechCrunch
With the global economic challenges increasing in 2023, mortgage lenders are looking for new digital solutions to simplify the underwriting process. Increased regulation in recent decades has made mortgages complex and has increased the associated costs, from origination and credit report fees to application and warranty costs. And when loan officers encounter tough procedural questions and borrowers with non-traditional or complex finances (common in underserved markets), they are typically required to refer them to a small number of experts, making the process even slower and more expensive. Actually off close to $2 trillion in mortgages that Fannie Mae projects by 2023, about $180 billion will be lost due to frictional costs associated with home sales and financing, estimates Sun West Mortgage Company CEO Pavan Agarwal.
But friction is not just financial. The mortgage and property industry is facing a crisis of confidence. While interactions with loan originators and real estate agents have largely migrated online, they still rest on the trustworthiness of individuals. For example, homebuyers lack the education and support to assess the counterparty risk of the parties they will trust their savings to. Home sellers can take a property off the market, only to discover that a potential buyer overestimated their financing abilities. To allay fears, professionals spend countless hours marketing their services and trying to prove their reliability. Despite such efforts, many clients express a lingering feeling of distrust towards all parties in the transaction.
To best respond to these pressing needs, Sun West has developed a ground-breaking blockchain-based AI platform called Morgan. Run by the sister company Cell type.com and together with the TRU Approval platform, Morgan is an AI platform that can process loan requests in minutes. It then converts the pre-approved property-specific loan into a property-agnostic tradable NFT in hours, which is backed by real dollars and conditionally guaranteed by Sun West. Since announcing the Tru endorsement program three years ago, Sun West has always honored the conditional warranty. By moving important financial transactions from private ledgers to the blockchain, Sun West not only speeds up the underwriting process – it also provides increased transparency for all parties.
“By making the underwriting process immediate, you remove the mystery, anxiety and expense of financing, and that translates immediately to the customer,” says Agarwal. “Morgan lowers the cost of originating the loan, saves money for our borrowers and removes any doubt about available financing.”
How Morgan Speeds Up the Underwriting Process
When you think of consumer AI, digital assistants like Siri or Alexa may come to mind. While Morgan uses far more natural speech recognition technology, its real power lies in how it streamlines and improves the home buying experience. Morgan’s built-in crypto wallet keeps financial documents and assets in a secure locker where loan officers, realtors and borrowers can easily find and move documents by talking to a simple interface that works like your favorite chat application.
The platform also manages multi-step procedures such as income calculation, changing the terms of a loan and running credit, completing them without typing errors or delays typical of the industry. Of the thousands of loan conditions Sun West receives, 99.5% of them are reviewed and resolved by the AI platform in under 90 minutes, with 70% completed in 40 minutes.
Morgan’s speed and accuracy are thanks in part to what Agarwal calls empathic technology. The platform deciphers how a user feels based on keystrokes, tone of voice, fluctuations in speed and stress in word pronunciation, all while having a simple conversation in dozens of languages. It reassures anxious borrowers and offers relevant information that can help. The platform’s deep knowledge of client history even allows originators to offer their customers improved loan terms. And because Morgan is “people-driven,” as Agarwal notes, a user can always double-check information with a professional. The power of machine learning combined with human oversight allows Sun West to guarantee 100% of Morgan’s analytics, which are typically returned within minutes.
The improved transparency of NFTs
Once the loan is underwritten by Sun West and a purchase contract is executed, Morgan converts it to a property agnostic NFT. The money is stored in trust accounts backed by financial institutions, while the loan is tokenized and embedded in a smart contract. This approach gives the home buyer the opportunity to make an offer equivalent to a cash offer, so that the home seller is confident that sufficient financing is actually available. A smart contract also confirms that the home buyer does not make several offers at the same time since there can only be one holder of an NFT at a time.
“What we traditionally call a home buyer is now a seller of their unique, credit-eligible NFT,” explains Agarwal. “To ensure that the NFT trades as agreed, the home buyer can either terminate the transaction and transfer the NFT or lose their earnest money deposit.”
Converting approved loans to NFTs has the added benefit of allowing Morgan to offer better service to lower income and gig economy borrowers. Instead of having to resort to niche lenders who specialize in helping those with more complicated income and credit histories, all homebuyers are empowered to present offers without open financing.
A blockchain-based revolution in real estate
Sun West is currently marketing Morgan to mortgage brokers with plans to sell to real estate agents, and will release a version tailored for consumers on February 12 – Super Bowl Sunday. Several banks are also moving forward to participate in the Morgan blockchain network and can thus offer the Morgan guarantee and Tru approval to their customers.
The company is focused on educating the public about how blockchain technology can bring cost efficiency and greater transparency to families hoping to achieve the dream of home ownership. And while blockchain is still a new concept to some, Agarwal believes it is poised to streamline real estate transactions. “Storing money and documents on the blockchain is a natural fit for the real estate industry,” he says, adding that historically real estate has been represented by a low-tech paper “NFT” that is naturally subject to security, error and trust concerns.
Ultimately, Agarwal believes blockchain is the key to safer, more efficient and fairer financial transactions in the real estate industry and beyond. “When financial statements are public, you’re no longer limited to making decisions based on one person’s word,” he says. “Everyone has the same information, and everyone gets a real sense of security.”
Experience Morgan’s empathetic AI technology
Celligence is a subsidiary of Sun West Mortgage Company, Inc. (Sun West), one of the largest independent, privately held financial services companies. As one of the fastest growing fin-tech companies, Celligence offers exceptional service, technology and product innovation.
At Celligence, a team of brilliant engineers continuously files new patents and pushes the boundaries of the financial services industry through innovations in mobile applications, customer acquisition and retention algorithms, and AI-based process automation.
About Sun West Mortgage Company (NMLS ID 3277)
At Sun West Mortgage Company, Inc., we are dedicated to providing a wonderful experience to our customers. To achieve this, we empower our loan officers so that they can find good prices and offer the most suitable loan options for each customer – with incredible speed. Our focus on technology has given us an edge in the mortgage industry to offer exceptional delivery times so customers can get into their dream home faster!
We are committed to our core values of people, experience, technology and product. Sun West was founded in 1980 with a “customers first” perspective and the desire to make the mortgage process easy and stress-free for prospective homeowners. Since then, Sun West has serviced a multi-billion dollar loan portfolio and is licensed in 49 states, the District of Columbia, Puerto Rico and the US Virgin Islands. Our 42 years of experience have been passed down to everyone here at Sun West through excellent leadership and ability.
For licensing information, go to: www.nmlsconsumeraccess.org. For full list of license information visit. Please see to see the Texas Complaint Notice and Service Disclosure. In all jurisdictions, Sun West Mortgage Company, Inc.’s principal (principal) licensed location is 6131 Orangethorpe Avenue, Suite 500, Buena Park, CA 90620, telephone: (800) 453-7884.