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A Real Estate Nightmare:
In 2014, the Hembrick family was notified by the Finance Department that the deed to their four-story, fifteen-room, $1.5 million brownstone, which had been in the family for generations, had been transferred to a new occupant. Only, they never sold their home. Turns out, the Hembricks, like many others, had fallen victim to deed-theft.
With blockchain, we might be able to put an end to fraud like this in the future.
Blockchain technology creates a digitally distributed ledger that keeps track of information by creating new blocks when one is changed and linking it to the previous block (See WWLT’s T3 Week 1). Virtually unhackable due to highly complicated encryption, a peer-to-peer network, and the hash system, blockchain technology is a way to ensure that data presented is secure. So with mortgage fraud on the rise as one of the fastest-growing white-collar crimes, and people sneakily filing forged deeds to the county clerk left and right, the real estate industry is clearly in need of the transparency that blockchain offers.
How mortgage and title fraudsters operate
– It’s pretty easy and common for thieves to make crooked deeds. All they have to do is digitally edit a deed by inserting their own names over the true owner’s and file the phoney deed with the Finance Department
– There have been many cases of owners finding other people living in their homes, not realizing that someone stole their property and sold it to a new occupant.
A non-counterfeitable deed
– Transactions are recorded near real-time on the blockchain, limiting risk and preventing changes or cancellations. Because records are clear and accessible on the blockchain, transactions cannot be manipulated or falsified.
– The peer-to-peer network also limits fraud. Copies of the history are heavily encrypted and stored on thousands of nodes, making it impossible to pass off crooked deeds as valid.
– External influences are minimized with the absence of third party interests.
– Miners are incentivized to validate blocks, so chains are heavily monitored.
Simplifying the title process
– An easily accessible chain of records makes property history transparent
– The due diligence process can be greatly simplified by assigning digital identities to properties and transacting parties.
Sources:
Fanelli, James, and Gustavo Solis. “Family Says Its $1.5 Million Brownstone Was Stolen in Deed-Theft Scam.”
DNAinfo, WNYC, 12 May 2015
www.dnainfo.com/new-york/20150512/hamilton-heights/family-says-their-15-million-brownstone-was-stolen-deed-theft-scam/
Kejriwal, Surabhi, and Saurabh Mahajan. “Blockchain in Commercial Real Estate.”
Deloitte.com, Deloitte Center for Financial Services, 2017,
www2.deloitte.com/us/en/pages/financial-services/articles/blockchain-in-commercial-real-estate.html.
Wallace, Charles. “Want to Buy or Sell a Home for Less? Look to Blockchain Technology.”
Realtor.com, 21 May 2018, www.realtor.com/news/trends/blockchain-technology-disrupt-real-estate/
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