Loans and Mortgages

The Complete Blockchain Professional Course Blockchain Use Cases in Finance
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In this lecture, we are going to discuss the problem related to the traditional Loans and Mortgage system. We will also see the solution for the same using Blockchain technology.

Transcript

Hey everyone. Welcome to the course. blockchain has been labeled as one of the most prominent technologies after the internet. There are multiple problems where blockchain can provide an effective solution. Some of the implementations are already making a huge difference in the traditional approaches. For example, Walmart employed blockchain solution to reduce the tracking period of food items from 18 days to two seconds.

In this lecture, we are going to discuss some of the potential blockchain implementations and discuss how we can create over solutions using those use cases. The first significant industry blockchain has disrupted is the finance industry. Let's go and understand some of the widespread problems and use cases for the finance industry. There are multiple products blooms related to the finance industry. Here we will discuss some of the issues and see how blockchain is going to solve these problems. One of the problems with the finance industry is the loans and mortgage sector.

There are a lot of intermediaries and banks throughout the process. This adds complexity to the loan process also increases the cost as well as time for processing the applications. A solution to such a problem is blockchain based peer to peer, mortgage and lending platform. We can initiate a smart contract between borrowers and lenders. The loans can be provided as per the tokens issued over the blockchain. blockchain will make sure that the real time reporting is provided for everyone.

The benefits of using such a solution are blockchain will be more cost effective and it will be free from the middlemen. Moreover, blockchain will increase the transaction performance and reduce the time taken for the banks or central authorities to confirm the transactions. This solution will also provide transparency between borrowers and lenders, where they will be able to see the complete process and how different details are being carried out. This solution will streamline the process of mortgage and loans, making it more efficient along with the reduction of time in processing the application. Let's visualize this use case with the help of a diagram. As you can see in the image, the first step for the newly married couple Alex and Maria is to apply for a home loan.

They zeroed in on the best suitable deal for them with the ideal First home, they apply for a formal loan by initiating an application for the loan, which will be represented as a block over the blockchain. This block will be broadcasted to every party involved in the buying process. The married couple will also share their identities, bank account, credit history, and other financial details required for the verification. The verification process is carried out by the third parties connected to the blockchain. Even after the verification process has been carried out, a formal evaluation may still be needed for checking the details about the property. Once everything is checked out a loan offer smart contract is generated for Alex and Maria.

They can sign the smart contract using their private key. every participant in involved in the loan process agrees to the smart contract, and the loan funds are transferred to Alex and Mario. Finally, the block is added to the blockchain, providing an immutable record for transaction. This record of the transaction over the network will be available to all the parties involved over the blockchain. This creates a verification and validation record for the couple and also help them in tracking the loan process. Once loan process is finalized, the property which Alex and Maria are willing to buy is transferred to them.

And another block representing the transfer of this property is added over the network. The whole process will actually cut down the role of intermediaries and middlemen, reducing the time taken to process the application the new couple will become a house owner in five days compared to the standard 42 days taken for this complete process to execute. this use case is a general representation of how a loan mortgage application work with blockchain. You can change details as per your requirements and create a full fledged application related to the problems in loan and mortgage sector.

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