Sun West Mortgage adds NFT to pre-approval process

The latest update to Sun West Mortgage’s Morgan proprietary artificial intelligence system allows the use of open ledger technology, more commonly known as blockchain.

Morgan will now convert a pre-approved property-specific loan into a property-agnostic tradable non-fungible token.

NFT is backed by real dollars and guaranteed by Sun West. The lender said this approach gives buyers and sellers in any income bracket the ability to present and accept offers with security and without open financing, making it comparable to an all-cash offer.

The mechanics behind a home sale transaction are changing. The home buyer is now the seller of an NFT if the property owner accepts the offer, explained Sun West CEO Pavan Agarwal.

In return, NFT guarantees that the seller will receive the proceeds of the loan.

“With NFT, it changes the dynamics of trading, especially now as we enter a buyer’s market,” Agarwal said. “It levels the playing field for sellers and buyers, because there will also be greater transparency” in the transaction.

That includes buyers being able to see in the blockchain other bidders for the property, while sellers can also track how many other property owners are working with that particular buyer, Agarwal said.

Broadly speaking, an NFT is a unique piece of digital data stored in a blockchain. It can be bought or sold, and its ownership is also registered on a blockchain. Sports collectibles are a common usage for NFTs.

Adoption of blockchain has so far been limited within mortgages, primarily with Figure Technologies i mortgage. The figure has created one mortgage register NFT to compete with MERS and it is working with Sagent to bring this to service.

Starting with Morgan, “the entire transaction can be done completely online, it brings you to a point where transactions are just like buying a product on Amazon,” Agarwal said.

With NFT, the purchase contract becomes a smart contract, and the buyer’s earnest money deposit is held on the blockchain in a secure crypto wallet unless otherwise instructed by the seller. However, like a traditional home sale contract, if the borrower chooses not to complete the transaction and not honor the NFT trading hands, the earnest money deposit is sent to the seller.

Morgan is also used by Sun West’s brokers and correspondents, plus the company licenses the technology to depositories.

Borrowers need access to Morgan’s automated AI technology and will receive a “TRU Approval.” TRU stands for thoroughly reviewed and signed. At that point the token is generated.

Morgan reviews and resolves 99% of submissions within two hours, with over 30% within 30 minutes, Sun West said. Sun West has several patents on the Morgan technology and is still applying for more.

With the TRU approval, “once the NFT is issued, it means that Sun West or any of the participating banks on our network are obligated to transfer the money,” Agarwal said.

NFT also equalizes the position of borrowers, he added.

“What we deliver is equality in service and speed to low-income borrowers with 3% down and [on] the lower credit spectrum … the same speed and attention and care as a high-income borrower with 20% down and an 800 credit score,” in what remains a very competitive housing market,” Agarwal said. Some of the low-income borrowers in a multiple-offer situation may have their offer overlooked when submissions are presented to the seller.

“But now with TRU approval, 3% down equals 20% down or a cash buyer because of the warranty,” Agarwal said. “I think having the blockchain technology on top of that brings a whole new level of transparency and simplicity to the transaction where it really becomes one click.”