Interested investors can buy and sell loans on the Provenance blockchain
Figure Technologies is excited to be the first to leverage the Provenance blockchain for buying and selling loans and loan participations. Every week, Figure will release a pool of Figure HELOCs for bid wanted in competition (BWIC). Interested banks, credit unions, funds and other institutional buyers can log in, diligence collateral, review and sign the loan purchase agreement (LPA) and submit a bid. One week later at 12:00 p.m. PT, the winning bidder will be notified and have 24 hours to fund the purchase. Loans can be reoffered in part or in whole back into the marketplace, giving buyers potential liquidity. As with all Figure HELOCs, the loans are recorded and serviced on Provenance blockchain.
Key advantages in the Figure marketplace include:
Figure is leveraging the Provenance blockchain to realize benefits such as cost savings, process efficiency, capital liquidity, real-time bilateral trading and transparent reporting. Learn more about this unique opportunity by reading the FAQs.
Any qualified purchaser, including but not limited to, banks, credit unions, insurance companies, REITs and investment funds. Onboarding to Provenance is quick and easy and consistent with typical loan purchaser due diligence.
Figure Lending is the servicer and HELOCs are purchased on a servicing-retained basis.
Figure originates all of its loans digitally and native to Provenance blockchain. Provenance acts as custodian for the loan, and registry of ownership for the loan and a ledger of all loan transactions and payments. In addition, at the time of origination, smart contracts operated by Figure perform validation checks on the loan file and the output of such checks is then documented in the loan file. The hash value (i.e., the unique, tamper-evident digital signature) of the loan file is stored on Provenance, a blockchain protocol. When a loan is transferred or pledged to a third party, a new hash is added to Provenance, reflecting the transferee as owner or pledgee, as applicable, of the loan.
Figure has built tools in its marketplace that allow for loan level and aggregate pool diligence. Outside of PII, the prospective buyer has visibility to all of the underlying loan information. In addition, Figure provides its underwriting guidelines and credit policy and reps that its loans have been underwritten in accordance with its underwriting guidelines.
The LPA is a culmination of two years of loan sale negotiations with counterparties. Non-material changes, e.g., to reflect trust ownership, may be requested and considered.
Over $1 billion in HELOCs, plus student loan refinancing and first lien mortgages.
A buyer has the ability to take the loan off chain. However, in doing so they would lose many of the economics benefits (custody cost, servicing, diligence costs) associated with Provenance.
Provenance uses best practices in security, including two factor authentication and digital certificates for identity. Digital assets on Provenance are not portable, and any transactions on Provenance have to happen through Silvergate, a Federal Reserve member bank. All records on Provenance are immutable, providing an audit trail for any transaction.
All mortgages are recorded with a county clerk to perfect the lien. An electronic, county-stamped copy of the mortgage is uploaded to the loan file so that the owner of the loan has a complete record of the loan documents. Whenever a HELOC is sold or pledged to a new party, Provenance is updated to reflect that party’s interest in the loan. A bill of sale is also executed to demonstrate the legal transfer from one party to another party.
No. Loans are purchased with fiat.
Bank and credit union loan pools have a post-close evaluation process that is designed to comply with FIRREA. We have historically sold loans to banks, among other buyers. While HELOC borrowers are not required to be credit union members, we expect to have credit union partners that reoffer memberized pools for credit unions.