INTRODUCTION
Homelend is a blockchain-based mortgage crowdfunding platform. There are various needs as human such as setting up a business, touring around, driving expensive cars, buying gadgets, giving the children education, e.t.c but we would consider shelter being superior than all other human needs, as human needs are unlimited;there is need for scale of preference. Shelter is so essential to human because one cannot be touring around from one place to another for years, it's not possible to set up a business without coming home after the day job to sleep.One must definitely have a home to rest his head after the day activities,so the importance of shelter to man cannot be over emphasized. Mortgage lending is one of the largest area in the financial world. During the past three decades, mortgage value chain has grown in complexity. Mortgage lending processes is paper-based and it mostly involve many players,thereby making them slow, tedious and complicated and this has several negative consequences for both the borrower and for other parties that are involved. The mortgage value chain consists of three distinctive stages which are origination,servicing and determination. Origination involve the application and closure of a mortgage loan. Servicing involves executing the obligation which arise from the loan during its lifespan Securitization also involve issuing of financial instruments called mortgage-backed securities(MBS).Both servicing and securitization takes place after origination has been completed.Mortgage origination comprises of all the steps and procedures that are necessary for the request, analysis, offer as well as formalization of a mortgage loan.Mortgage loans remain complex involving a lot of paper work efficiencies. Homelend has developed a very innovative platform that uses the power of blockchain technology and this will disrupt the mortgage industry and this can only be achieve by opening a new P2P funding /investment opportunities which reduces origination costs by automating business processes with the assistance of smart contracts. The collection of information is performed in an all digital way in homelend platform.
BENEFITS OF BLOCKCHAIN TECHNOLOGY AND SMART CONTRACTS
Blockchain can be refer to as Mutual Distributed Ledger(MDL).Records are stored in multiple locations in a way that no organisation or entity can actually control it and with this,modification can not be achieve in distributed ledger.Distributed ledger constitutes the core of blockchain platform.Most people are still banking their money due to the fact that their money is save in bank.Ability to code and execute smart contracts is another important feature that has gained increased attention. Smart contracts are also computing programs which execute specific actions when pre-defined conditions are met. In this new era of technology, many companies or business processes are automated without the need for human intervention. Smart contract in the cryptoworld has a key added feature i. e it is run in a distributed, shared platform such that its execution is automatic and this automatic execution can not be affected by anybody. In such way, transactions and agreements can be carried out between disparate parties without the need for legal system or external enforcement mechanism and as such, transactions can be traceable, very transparent and irreversible.
Smart contracts has an increase efficiency and delay diminishes. It also reduces or eliminate the need of financial intermediaries completely. Smart contracts also introduce a significant cost savings. In a report about smart contracts in the financial industry, Capgemini consulting estimated that for the US and EU markets, blockchain could save loan providers a minimum of US$ 3billion through the automation of tasks by means of smart contracts. On the other hand, of external entities like insurance companies, tax authorities and land registries become accessible through the blockchains,cost savings could be as much as US$ 11billion. For the individual borrower, cost savings could range from US $480 up to US $ of then 980,based on an average processing fee of US$ 4350 for each mortgage loan (that is a significant 11% to 22% cost saving)
PROBLEMS AND ISSUES OF MORTGAGE ORIGINATION
The processes in mortgage origination is usually lengthy. Due to the fact that mortgage origination requires the gathering of all the required documents for the mortgage application can a time consuming for the borrower and the applicants don't understand most of the important concepts.
RELATION OF P2P LENDING AND MORTGAGE INDUSTRY
P2P lending is also known as "Alternative finance which is the process by which individuals can borrow and lend from each other without the intervention of banks or other financial intermediaries. P2P (peer-to-peer) lending platform such as prosper and lending club have been in operation for more than a decade in the U.S .Infact, the market has outgrown expectations. About ten years ago, experts estimated a US $10 billion market size for us. In the real sense, the marker size was US $34.5 billion at the end of 2016.
Blockchain technology has create new possibilities for P2P lending. It's therefore now considered the next step in digital ledger technology (DLT). DLT was able to record transactions, among them loans without banks or other financial entities acting as middlemen due to their transparency, security and immutability. Numerous blockchain -based P2P lending platforms have been developed for microloans and consumer lending and this does not exists for the mortgage market. There are 2 fundamental types which are; (1) Information flows, and (2) Financial flows
Information flows can be related to either the borrower or the property while the financial flows are represented by the transmission if monetary resources from the lender to the seller. The flows, processes, and objectives are interconnected. Amount of borrower information that needs to be obtained to access creditworthiness is one of the main reasons behind the excessive length of the mortgage origination process. Most of this information is paper-based documents, which in turn come from different parties such as banks, employer, e. t.c. It would be impossible to perform a sound assessment regarding the borrower's creditworthiness in the absence of this information. The most relevant information is related to the financial situation of the borrower. Soft information is another tyoe of information that is related to personal circumstances such as education level, age,sex,e.t.c.
Creditworthiness assessments are mostly based on hand information, soft information can be very useful and it is increasingly utilized.
P2P lending systems are making extensive use of data that are generated in social networks with the help of artificial intelligence and machine learning. One of the key pillars of a P2P mortgage lending platform is that both the collection of borrower's information and its use are crucial. Collection of information is performed in an all digital way in homelend 's platform.
METHODS OF P2P LENDING
There are 3 different P2P lending methods which are; Pure crowdfunding, pooling, and Auction. The flow of financial resources is controlled and executed by smart contracts without middlemen or financial intermediaries in each of the P2P lending methods. The difference between the methods occur from the specific approach used and a pre-approved mortgage loan. Potential lenders will find investment opportunities in the form of the aforementioned under the crowdfunding method (the simplest one).The advantage of the crowdfunding method is its simplicity and the disadvantage lies in the difficulty encounter in getting enough investors for a loan. The crowdfunding process must take place after the mortgage loan has been properly sliced.
The pooling method adds some economic flexibility to the system, but it's also less simple from a technological perspective. Lenders will be able to invest money through smart contracts before the specific mortgage loan to be financed has been pre-approved in contrast to pure crowdfunding under pooling. The investment is conducted under the same "slices " framework. The only difference is that the smart contract will allow lenders to "pre-buy" the "slices" before they have been properly created. Pooling method has the advantage to allow some level of financial buffering, without the need of a financial intermediary or a middleman. The smart contract will allocate funds from risks pools to specific slices on a first -come -first serve waterfall basis. This feature adds efficiency and flexibility to the financing process although it is more complicated than pure crowdfunding somehow.
The auction method will be developed as a variant of the pure crowdfunding method. Unlike pooling, no financial buffering will be involved. The central difference between the auction method and pure crowdfunding is that lenders will be able to offer borrower's better conditions than those pre-approved by the platform. When a mortgage loan is pre-approved, it will be divided into "slices " the same way it is under the other two methods. The size of the loan, its duration and conditions will not be subject to any change.
However, lenders will be able to bid on specific "slices " by offering better terms in two ways:(1) By charging a lower interest rate than the one pre-approved and (2) By providing discount points to the borrowers.
MECHANISM OF HOMELEND P2P MORTGAGE LENDING
Homelend P2P platform works by embedding mortgage lending business logic into smart contracts. Homelend allows individuals to borrow money from their pets in a trusted, transparent and secure way. The key idea is that borrowers and lenders are not linked by means of financial intermediary or a centralized P2P lending platform but rather by smart contracts that automatically execute a pre-defined business logic. They are subordinated to three main objectives;issuing a loan that (1)makes the possible purchase of a property (2)That can be successfully paid back by the borrower and (3) That can be recovered to a satisfactory extent in case of default.
EVENT OF TOKEN GENERATION
The choice to create a utility token has been carefully considered by the founding team and it is based on several reasons and goals. The creation and issuance of a crypto token for Homelend is justified by the platform's economic dynamics. The key feature of the system is the reduction of friction costs, and the availability of the service for a wide population. The system will be able to operate independently of any third party or financial intermediary that needs to approve the transfer of fiat currency. Borrowers from any country will be able to benefit from Homelend's services, without the limitations of restrictions derived from monetary policies established by governments.
TEAM
The team is made up of highly experienced and well equipped individual in blockchain technology.
CONCLUSION
Homelend allows individuals to borrow money from their peers in a trusted, transparent and secure way. The key idea is that borrowers and lenders are not linked by means of financial intermediary or a centralized P2P lending platform but rather by smart contracts that automatically execute a pre-defined business logic.
For more information on HOMELEND, kindly visit this links.
Website: https://homelend.io/
Whitepaper: https://homelend.io/files/Whitepaper.pdf
Telegram: https://t.me/HomelendPlatform
Facebook: https://www.facebook.com/HMDHomelend/
Twitter: https://twitter.com/HomelendHMD
LinkedIn: https://www.linkedin.com/company/18236177
Medium: https://medium.com/homelendblog
Reddit: https://www.reddit.com/r/Homelend/
Bitcointalk ANN: https://bitcointalk.org/index.php?topic=3407541
Bitcointalk Username: feranmi2018
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