Blockchain Home Ownership Platform Reducing Borrower Financial Strain
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Solution Overview
Problem
Current methods for home ownership often result in higher interest rates for borrowers with higher risk profiles, leading to increased monthly mortgage payments and a higher likelihood of default, particularly for those who can least afford housing, as they are required to hold more equity, which can be financially straining.
Innovation Solution
The implementation of a platform that uses blockchain-based smart contracts and asset tokens to fractionalize home ownership, allowing impact investors to participate alongside traditional investors, thereby reducing the burden on borrowers by adjusting the minimum retained equity (MRE) requirement and enabling secure investment opportunities with lower monthly payments, while also providing a mechanism for homeowners to purchase additional equity over time.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional mortgage methods are used with risk-based pricing, then lenders can compensate for higher default risk, but borrowers with higher risk profiles face higher interest rates and monthly payments
Solution Approach 1:
The patent segments home ownership into fractional shares represented by tokens, allowing multiple investors to pool resources. This segmentation enables lower individual equity requirements while maintaining adequate risk coverage through diversification across multiple properties and investors.
Solution Approach 2:
The platform creates a universal system that serves multiple functions: it enables fractional ownership, provides risk pooling across diverse properties, offers flexible equity purchasing options, and maintains traditional mortgage mechanisms all within a single ecosystem, benefiting various types of borrowers and investors.
2Reliability
If borrowers are required to hold more equity to reduce lender risk, then loan security increases, but financial strain on borrowers increases
Solution Approach 1:
The patent merges multiple investor funds into a pooled structure that collectively provides the equity requirement. Instead of one borrower holding all equity, multiple investors contribute portions, combining their resources to meet the security requirement while reducing individual burden.
Solution Approach 2:
The system changes the parameter of equity ownership from a single-borrower requirement to a distributed investor structure. This parameter change allows the total equity amount to remain sufficient for security while the per-person financial strain decreases through shared ownership.
3Reliability
If the mortgage market maintains traditional risk stratification, then lenders can price risk appropriately, but the market remains stratified and inaccessible to higher-risk borrowers
Solution Approach 1:
The patent adds a new dimension to risk management by introducing geographic and property-type diversification. Instead of stratifying borrowers into high/low risk categories, the system distributes risk across multiple dimensions (locations, property types, investors), making the market accessible to borrowers who would traditionally be classified as high-risk.
Data Source
AI summary
Methods and systems for transferring information, comprising: transmitting, by a first computing device of the first computing system, a first network function request to a decentralized network, the first network function request including first information; and transmitting, by a second computing device of the second computing system, a second network function request to the decentralized network, the second network function request including second information.