What is DART?
How Figure turned a mortgage into an NFT using Provenance Blockchain
Here at Figure Technologies, there are a few of us who don’t quite fit into the vision you’d have for edgy blockchain-based fintech company employee:
A number of us hail from the old-school financial services world, from the particularly stodgy segment of mortgage. And in the mortgage world, the perception of blockchain is that it is “a solution looking for a problem” and that mortgage still hasn’t found a valuable use case for blockchain.
Well, for those of us old-school mortgage people at Figure, we’re pretty excited because we’ve identified a very compelling use case for blockchain that brings all the speed, efficiency and reduced cost that blockchain has to offer.
And the mortgage industry is noticing, so much so, that we’ve stood up a business to support it: Digital Asset Registration Technologies (DART). DART is a blockchain-based lien and eNote registry. (You can think of it as a blockchain alternative to MERS).
This simple use case takes advantage of one of blockchain’s core attributes: it is an immutable record of ownership and value.
DART enables lenders to originate loans as fully digital assets and instantaneously trade them with counterparties on Provenance blockchain as digital tokens.
This use case came out of our original intent to enable a digitally native mortgage loan asset (a loan that, even though it was a digital asset, would be fully enforceable in a foreclosure). To achieve this, we looked at the laws that govern transferable records (ESIGN and UETA) and built our own system that complies with these laws, and built tools on top of Provenance Blockchain.
The end result is a lien and eNote registry system that automatically listens to the immutable record of the chain and tracks loan ownership, eNote “control,” “location,” and servicing as the digital asset is traded.
Some of the benefits we’ve seen so far: At closing, in addition to all the benefits of e-signing, DART is cheaper than registering a loan with MERS, and does not require manual processes or data reconciliation. At funding, a warehouse lender has fully perfected ownership prior to releasing funds and they may take advantage of a bilateral (or trilateral) instantaneous transaction between originator, warehouse and investor. The investor is able to see the benefits of real-time trading with no settlement risk, and is able to buy the asset within days of the loan closing.
In standing up DART, we’ve allowed any lender the ability to create a unique digital asset that contains the eNote, plus all the other loan data and docs — we’ve fully tokenized the real-world mortgage asset.
No more shipping, custodians, etc. You can view and own the asset on the blockchain. And if the blockchain says you own the mortgage token, you own the mortgage, and you’re entitled to the repayment stream — plus you can walk right into a courtroom, point to DART, and prove ownership of the mortgage.
Mortgages are our first play, but DART will be used to register other “controllable” asset classes that can be fully tokenized, like auto loans, solar loans, equipment leases, student loans, personal loans, and some types of securities. All of these asset types can be tokenized such that the real-world rights are inextricably linked to the on-chain token. If you “control” the token, you own the assets. Mortgage is just the beginning.
Leah is Director of Lending Ecosystem at Figure. She is fervently dedicated to manual transmissions and drives a barely-street-legal BMW E46 M3.