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This Company Wants To Turn Your Mortgage Into An NFT

The hottest NFT on the market may not be an ape or sport’s highlight—but your mortgage. 

Indeed, mortgage lender LoanSnap recently spoken they had minted the first NFT mortgages in existence, using their Bacon Protocol to wrap seven mortgage liens into tokens collectively worth $1.5 million. 

The benefits of such tokens, equal to LoanSnap, are lower mortgage rates, faster loan approvals, and greater flexibility virtually repayment terms. The subtitle stuff that as the blockchain can permanently record information like applicant credit score, debt-to-income ratio, and home value, the need for verification through middlemen is eliminated—in turn reducing the forfeit and time involved in the lending process. 

While these potential benefits are indeed significant, the largest beneficiaries of this innovation are scrutinizingly certainly retail investors—who for the first time are gaining wangle to the highly-coveted $17 trillion mortgage industry. 

For those unfamiliar, financial regulation and wanted requirements have historically made it virtually untellable for everyday citizens to get involved in mortgage lending. This has left large financial institutions and the government to soak up all of what’s considered to be one of the lowest-risk and resulting windfall yielding windfall classes available. Tokenizing housing debt eliminates many of these barriers to entry—making it theoretically possible for anyone with a DeFi wallet to own a unperformed share of a mortgage. 

“What we’re basically worldly-wise to do is take out all the middle people that are involved in those transactions so that the lender gets the lion’s share of the return,” says LoanSnap CEO and Salary Protocol co-founder Karl Jacob. “This is unconfined for people and allows them to invest in an windfall matriculation that was previously only misogynist directly to governments and large financial institutions.”

On a technical level, what LoanSnap has washed-up is mint NFTs tied to individual mortgage liens (the property ownership rights that collateralized mortgage loans), and then used those non-fungible resources to when their stablecoin, known as the bHOME token. As payments are made towards, mortgage, or the underlying property appreciates, the bHOME token grows in equal value—generating a return similar to what a wall would receive as a mortgage lender. 

With such a historically well understood windfall like housing underlying their stablecoin, bHOME aims to have an increase in transparency over other stablecoins (notably Tether) which have been notoriously opaque in publishing the contents of their reserve assets. And by appreciating their forge value in line with the underlying real estate, bHOME in theory gives investment upside over other stablecoins (the Bacon Protocol whitepaper dubs it a ‘Stable ’ coin.) 

Currently the Salary Protocol only accepts loans that meet the Fannie Mae and Freddie Mac Conforming Loan guidelines. However as the protocol expands, it will be theoretically possible to mint spare tokens on the Salary Protocol each with a specific set of criteria, for instance liens on homes in a given metro area, or only homes worth increasingly than $1M. This enables investors to get exposure to real manor in a given zone without needing to invest in any one specific home. 

The idea is that as protocol grows, the network will decentralize such that any qualified lender could match with a homeowner on the Salary Protocol and mart tokenized liens for loans under the criteria that suits them.  

“So when we think well-nigh our platform, we have multiple lenders…We’ve got Wells Fargo and Chase and Fannie Mae and Freddie Mac and all these variegated lenders. It’s basically a marketplace,” describes Jacob. “What we do [on the Salary protocol] is collect all the information we need to satisfy that lender, that can be income statements, tax returns…a whole tuft of stuff—and then at the end of that process, we have the opportunity to sell that loan to one of the investors.’

The idea, while promising, is certainly nascent. At the moment less than 100 wallets are holding bHOME tokens, and the market cap is just over $1 million. In the seven mortgage NFTs minted to date, LoanSnap has make-believe as both mortgage originator and protocol owner, making the current endeavor increasingly a proof of concept than a streamlined innovation in home loans. 

Although ambitious, proofs of concept are not uncommon in the cryptoworld (with many of them reaching fruition way vastitude popular expectations). While a full fledged NFT mortgage marketplace is likely years away, investors looking to get in on both the housing tattoo and the NFT craze may be interested in getting their salary on the protocol.

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