Staircase leverages blockchain in new service transfer technology

Staircase, a fintech company that has put together an expansive set of interconnected digital mortgage tools, introduced new blockchain-based technology to service transfers on Tuesday.

The latest automation is aimed at ensuring that compliance-sensitive information is transferred correctly in an active mortgage servicing market. The Consumer Financial Protection Bureau has some specific requirements around this process, with a particular focus on ensuring that it does not interrupt modifications or other loss reductions in progress.

“MSR transfers are increasing in volume given the increased value of the servicing rights, so it’s just a natural market to spend a little more time in right now,” said Adam Kalamchi, co-founder and CEO of Staircase.

A growing number of fintechs have been looking to update automation used by service operations, which have become more prominent as prices have risen. Recently, for example, Valon teamed up with a quality control provider called ACES to meet needs in space; and distressed mortgage technology provider Clarifire linked its platform to an IndiSoft has to involve advisers in the service process.

At the same time, blockchain technology and the cryptocurrency it was originally designed to record is increasingly being used in the mortgage and banking industries, although there have been some regulatory caution around the latter. Startup Moon Mortgage, a lender that plans to use crypto to partially secure loans, recently raised $3.5 million in seed money, and Bank of New York Mellon officially launched custody services for digital assets on Tuesday.

“We use an immutable ledger so you can actually say we know every change in income, every change in the loan balance, which adds a lot of richness around analytics and risk and auditability of how the loan file was created, so there’s an advantage to using blockchain. The other is really secure data sharing,” Kalamchi said.

Staircase’s latest technology works with its Loanboarding platform, which uses machine learning to extract and classify data from loan documents and then applies quality control procedures to it.

Other automation Staircase has offered includes technology used by private mortgage insurance companies to automate non-delegated underwriting of MI policies in connection with mortgages. It also offers a tool for selective pre-approvals, and one that connects lenders with credit reporting providers. It typically charges a fee of $50 per loan, or less if the Loanboarding automation is used in conjunction with the new MSR transfer technology.

“We have already attacked loan onboarding, which is a very complicated process to get right and at a low cost, same for MI, and MSR transfer is just a natural extension of that,” Kalamchi said.