Mortgage lender LoanSnap has announced the minting of its first seven residential mortgages as non-fungible tokens (NFTs) through its Bacon Protocol platform.
What Happened: Bacon Protocol’s NFT mortgages are based on what LoanSnap describes as “smart loans” based on a borrower’s complete financial experience. The Costa Mesa, California-based company uses artificial intelligence to determine if a borrower is eligible for a mortgage.
According to a CoinTelegraph report, the interest rate for an NFT mortgage ranges from 1.5% to 3.1%. In comparison, the interest rate on a 30-year fixed-rate mortgage as of Nov. 10 was 2.98%, according to Freddie Mac FMCC.
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What Happens Next: The Bacon Protocol model is built on the Ethereum ETH/USD blockchain and enables homeowners to exchange a lien on their property for an NFT that represents a part of the property’s value. Those buyers are able to use the NFT as collateral across the DeFi ecosystem. After the NFT is minted, it is sent to the borrower who will make mortgage payments directly to Bacon Protocol.
“The mortgage industry is not meant to be replaced, but built upon with new technology,” said LoanSnap co-founder and CEO Karl Jacob. “NFTs and smart contracts fit perfectly into the lending world as they are similar to many legal arrangements in real estate, with upgraded technology and features.”
LoanSnap did not disclose the locations of the properties with its NFT mortgages nor the size of the loans.
Photo: GotCredit / Flickr Creative Commons
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