United States, April 19, 2021 /AlexaBlockchain/ – Liquid Mortgage has raised seed round funding from Redwood’s recently launched RWT Horizons venture investment strategy.
Redwood Trust, Inc. (NYSE: RWT), a specialty finance company focused on several distinct areas of housing credit, today announced an investment in Liquid Mortgage, a patent-pending startup that provides life-of-loan infrastructure to digitize, track documentation, facilitate payments, and record additional information on a blockchain. This is the third investment under Redwood’s recently launched RWT Horizons venture investment strategy.
Redwood stated that both the companies share a common vision of utilizing blockchain technology within the current market infrastructure, rather than attempting to reinvent it. The investment is made after a several month engagement between the Companies, during which they developed an actionable strategy for achievable and beneficial improvements to targeted elements of the mortgage ecosystem.
The Companies are initially focused on how blockchain can improve certain processes in the non-agency mortgage sector, specifically post-close purchase activities, servicing, securitization, and secondary trading. The Companies believe that process improvements can create significant cost savings across the mortgage value chain that can greatly benefit consumers by effectively lowering borrowing costs. The overall value proposition to loan holders may include lower frictional and transaction costs, increased transparency, and execution certainty, with the option to create unique risk profiles through loan fractionalization.
As an initial use case, the Companies are working with various industry partners to explore leveraging blockchain to facilitate more timely loan remittance data to RMBS investors, an improvement that could significantly enhance market liquidity. As part of their work, the Companies recently placed a Redwood-sponsored Sequoia securitization on a blockchain in a test environment.
The Companies, with contributions from Wilmington Trust, have developed a white paper describing their long-term vision for the mortgage ecosystem. The paper highlights current market inefficiencies, introduces new technology solutions, and provides a roadmap for the evolution of the industry.