By Meghan Hall
The mortgage and default industry has changed dramatically since the Great Recession and even more so with the rise of software solutions designed to increase transaction efficiency and vendor oversight across the mortgage and lending process. One platform, Equator PRO, announced its integration with blockchain-as-a-service Factom Harmony to further improve its REO and default mortgage services. The Registry spoke with Equator’s Director of Product Management Jarad Bernotavicz to find out how the addition of Factom Harmony to Equator PRO carefully tracks and protects transaction activities, data, events and decisions.
Can you tell me a little bit about your background in real estate, your position with Equator and how you helped to facilitate Equator’s integration with Factom Harmony?
So, I joined the mortgage industry at the time that I joined a company called REOTrans. Equator was originally known as REOTrans, and people who have been in the mortgage industry for a long time would recognize that name. Back then it was just a tiny little group of developers, of which I was one. That was before the crisis had happened and obviously after that things really took off from there. Today, as my position as director of product management, it’s really exciting for me to reach this point where Equator is inside the Altisource business unit that allows us to compete and often bundle our services, and the technology platforms are already integrated. That makes our discussions and interactions with potential customers more exciting, because it’s more comprehensive in the types of problems that we can solve for them. And it’s not just sort of your typical benefits; we’re really looking holistically at what their priorities are to help them find full-featured solutions.
What kind of client does Equator seek to help? Just those who work with default mortgages or those across the entire mortgage/lending industry? Why?
It is really in the area of default, currently. We’re known for providing information and solutions for the bigger banks, but we actually have a platform solution that works really well for medium or smaller sized banks or credit unions or institutional investors. We’re even targeting smaller investors these days.
For our readers who are unfamiliar with loan management technology, what is blockchain, and how does it allow users to create records of activities and data as they pertain to real estate?
For people who don’t know blockchain, it is a distributed security technology that uses cryptocurrencies as a way of storing distributed ledgers and making them secure. It’s often confusing for people, because they think of cryptocurrency and what it’s known for in the news, and so obviously people are speculating with the “buy low and sell high” and some of the shadier transactions around that. But this serves a totally different purpose. It’s just a method to add extra security for the way that our technology platforms operate and are secure in their own ways today. One way to look at it is that the typical security philosophy, you want to wall everything off, and it’s very much about controlling the traffic in and out of the “safe” that is built. We’re not taking away from any of that, but by using blockchain we’re adding to it. That in addition to the safe, you have this collection of mini-safes all throughout where everyone is storing distributed ledgers. All of those tiny safes have to be cracked in order just to crack the one transaction that you saved using blockchain.
Why did Equator choose to integrate with Factom? Why not develop its own blockchain-as-a-service (BaaS) platform to improve Equator’s own services?
Factom presented a very unique partnership opportunity in that their BaaS was very much tailored to what we would want blockchain to do for Equator’s customers. And so it was already a to-go type of partner. What they do that is really unique is that they have really focused on transactions: complicated transactions, histories of transactions. If you had gone through a history of transactions outside of the mortgage industry that might be an asset like a car that’s gone through construction, and then is shipped out and then reaches a customer, that car is going to go through a series of transactions. For us to go and write direct blockchain for that type of thing would have been a lot of work, and for us mortgages and loans and default properties are similar to that car, and so their technology allows us to maintain a chronological history of those complex transactions, which we were already storing in our workflow. We just call upon their tools to add an extra level of historical check.
From your perspective, what does the mortgage and lending industry look like right now? What impact have integrated services had on the real estate industry?
I won’t go so far as to speculate what the overall industry trends are going to be. But I can speak for the technology landscape that has evolved since I started in those early days before the crash. There is a lot more integration between systems. Back in the days when the downturn happened, there was a lot of throwing bodies at things and a scramble for lack of a better word. Should the market turn again, I think the financial industry is already positioned better for integrated systems. There’s been, I think, a lot of consolidation, healthy consolidation, both within banks internally and within the landscape of vendors that they use. Teams have partnered up and have provided comprehensive systems and they have to be flexible, adaptable to the regulatory landscape. From that perspective, I am optimistic that we will weather any storms that come up and technology will play a critical role in that.
How is Equator Pro and its integration with Factom Harmony different from other platforms that seek to service the default mortgage industry?
Equator has the ecosystem of interconnected services to execute solutions in a controlled way and maintain a lot of transparency. We’ve been doing that from the beginning. The addition of blockchain does not take away from any of those benefits. It does allow us to have a very complex transaction that is integrated with other intermediaries, and that holistic transaction can be saved away just in case you need it. Our initial designs with blockchain focus on that, and it’s beneficial if something were to change with the bank or they were to undergo some litigation and needed to be able to pull back, as evidence, something that was very comprehensive in the data it provided. That is an extra benefit that blockchain and Factom provides.
Have you seen Equator PRO in action with Factom Harmony yet? What has been the response to the integrated product? Would you change anything about the platform and the way it functions now that it is integrated? Why or why not?
We don’t expect to change the Equator process, automation and design, because they have been proven to provide good value. The addition of blockchain, although I wouldn’t say it has been wholeheartedly embraced by all servicers out there, people do see it as a sort of inevitable progression of where we’re going, and it was just a question of “when.” So, we wanted to be one of the first in this area; we don’t want to detract from any of the value our current services provide, but we’re adding this extra layer of security as an option, and we want our customers to be prepared already. Because of that, we’re actually considering giving this service away as inclusive with the use of the Equator platform, and you can almost think of it as a type of insurance. If you don’t really think about purchasing something like that until you need it, so if we have this extra security saved, and then in the unlikely case that a customer needs to pull back those secure transactions, we will be ready to provide that for them.
What’s next for Equator and Factom? Are there any plans to expand services further? Why or why not?
Foreclosures and bankruptcies have very complicated rule sets in how the systems are going to behave in terms of adhering to all federal regulations, timelines and guidelines and so on. In the future, we expect to make it much more ubiquitous throughout the Equator library of possible platforms. We also want to work with Factom to establish an industry standard as a team, to make sure that if we’re setting up some of the first style of secure transactions, that we’re doing them in a consistent way that encourages others to adopt those standards, and then we can leverage off of each other.