Blockchain’s Impact on Loan and Mortgage Securitization

Securitization is how most home loans, and many commercial ones, end up funded: a lender pools mortgages, sells them into a trust, and the trust issues bonds paid from the borrowers’ payments. The process involves originators, custodians, servicers, trustees, rating agencies and investors, each keeping its own records of the same loans.

Blockchain promises a single shared record of who owns each loan and smart contracts that move payments automatically. This article separates what is actually running from what is still a pilot or a white paper, for lenders, investors and borrowers who want to know whether it changes anything for them yet.

How loans are recorded and securitized today

Mortgage paperwork has gone digital, but mostly without blockchain. In the U.S., an electronic promissory note (eNote) is tracked on the MERS eRegistry, which MERS describes as the legal system of record identifying who controls the authoritative copy of each registered eNote and where it is held. MERS reports more than 3.3 million eNotes registered since the registry began.[1] Fannie Mae requires lenders delivering eNotes to register them on the MERS eRegistry within one business day and to transfer control through it.[2]

In Canada, residential mortgages are securitized through programs run by Canada Mortgage and Housing Corporation (CMHC): National Housing Act mortgage-backed securities (NHA MBS) and Canada Mortgage Bonds, which CMHC guarantees.[3]

In both systems, the friction is less about paper than about reconciliation. CMHC’s own study found that participants in the NHA MBS process collect and verify the same information several times and face heavy reconciliation, which is the problem blockchain is meant to address.[4]

What blockchain and smart contracts would change

A blockchain is a shared ledger: every participant sees the same record, and past entries cannot be quietly edited. A smart contract is a program stored on a blockchain that follows “if this, then that” rules; on Ethereum, it runs as written and its code cannot be changed once it is created.[5]

Applied to a loan pool, that could mean:

• One ownership record. Each loan is represented on the ledger, and a sale or pledge updates it for everyone at once, instead of assignments being re-papered and re-keyed.
• Loan-level data for investors. Bond buyers could see the same payment data as the servicer, rather than periodic reports.
• Automated payment flows. A smart contract could split borrower payments among bondholders according to the deal’s rules.

The last point cuts both ways. Code that cannot be changed is reliable when it is right and expensive when it is wrong, and real deals are amended, restructured and litigated.

What is in production, and what is still a pilot

Selected blockchain projects in lending and securitization

1. September 2019

   Santander issues a bond on Ethereum (pilot)[6]

   A US$20 million, one-year bond issued and held on the public Ethereum blockchain, with the cash and quarterly coupons also tokenized. It was bought by one of Santander’s own units.

2. 2020–2021

   CMHC tests blockchain for NHA MBS (proof of concept)[4]

   With Accenture, CMHC built a proof of concept covering five steps in creating an NHA MBS pool, tested with CMHC and two financial institutions. The next step proposed was an industry consortium and a pilot.

3. April 2023 onward

   Figure HELOC securitizations (production)[7]

   Home equity lines of credit originated on Figure’s platform went into 15 securitizations by September 2025, all rated, each with AAA-rated tranches.

4. April 2024

   Figure launches DART (production)[7]

   A lien and eNote registry built on the Provenance Blockchain, which Figure positions as an alternative to manual assignments and systems such as MERS.

5. June 2024

   Figure Connect marketplace opens (production)[7]

   A blockchain-based marketplace for buying and selling loans. About US$1.3 billion of HELOCs was traded on it by third parties in its first 12 months.

Santander’s bond was a deliberate first step: the bank said its goal was to move “from the project stage to product development”.[6] CMHC’s work stopped at a proof of concept in its published material. Its white paper set out a path to a consortium, a pilot and eventually a production launch, but we found no public announcement that any of these followed.[4][3]

Figure Technology Solutions is the clearest case of blockchain used at scale in U.S. consumer lending. Its September 2025 IPO prospectus gives these figures, all reported by the company:

Figure’s blockchain lending platform, as reported in its 2025 prospectus

Home equity lending facilitated in the 12 months to June 30, 2025[7]

~US$6B

Of loans originated on its system that used the DART blockchain registry, first half of 2025[7]Up from 2% in 2024

80%

Rated securitizations including its HELOCs since April 2023[7]

15

Figure says it tokenizes a loan by representing the digital loan note on the Provenance Blockchain when the loan is made, then uses the blockchain to record each change of owner as the loan is bought and sold.[7] Note what these numbers are: one company’s home equity lending, mostly residential, much of it on its own platform. They show the approach can work at volume. They do not show that the wider mortgage market has moved.

What the technology does not fix

Blockchain in a loan pool

What it can improve

• One shared record of who owns each loan, updated once.
• Fewer reconciliations between originators, custodians, trustees and investors.
• Faster loan sales and pledges when every party uses the same ledger.
• Loan-level data available to investors in close to real time.

What it cannot change

• The borrower’s ability to pay, the property’s value and the quality of underwriting.
• The land registry or county records, which still decide who holds title and whose mortgage ranks first.
• The need for every party, and the courts, to accept the ledger as the legal record.
• Errors in the data entered, and bugs in contract code that cannot be edited once deployed.

A ledger is only as good as what goes onto it. If an appraisal is inflated or income is overstated, the blockchain records the bad loan accurately and permanently.

There is also a network problem. A shared ledger saves money only when the originators, warehouse lenders, trustees and investors involved all use it. That is why the working example is a vertically integrated platform, and why industry-wide projects like CMHC’s needed a consortium before they could go further.[4]

What it means for commercial borrowers and lenders

For owners of hotels, apartment buildings and other commercial property, very little has changed yet. Commercial loans are larger, more negotiated and less standardized than home equity lines, which makes them harder to put on a shared platform. The published production examples are in residential and consumer lending.

If a lender or investor offers you a blockchain-based structure, ask the same questions you would ask of any loan or security:

Questions to ask about a blockchain-based loan or security

1. What is the legal record?

   Is the blockchain entry the legally controlling record of the note and lien, or a copy of records kept elsewhere? Who resolves a conflict between them?

2. Is the mortgage registered in the usual way?

   The charge or deed of trust should still be registered in the provincial land registry or county records.

3. Who services the loan?

   Smart contracts do not answer phone calls, grant extensions or negotiate workouts. Find out who does.

4. Can the terms be amended?

   If payment rules are in code, check how modifications, waivers and defaults are handled.

5. Which securities rules apply?

   A tokenized interest in a loan pool is generally still a security, with the same disclosure and resale rules.

On the last point, the SEC treats a tokenized security as a security, and Canadian regulators have said that tokens tied to a business’s future profits are likely to be securities.[8][9] Our guide to tokenization and fractional ownership covers the regulatory side in more detail.

Sources

1. MERSCORP Holdings (MERS System and MERS eRegistry) — MERSCORP Holdings, Inc. (Intercontinental Exchange). Checked 2026-10-12.
2. eMortgage Solutions and eNotes — Fannie Mae. Checked 2026-10-12.
3. Securitization — Canada Mortgage and Housing Corporation. Checked 2026-10-12.
4. Blockchain Innovation Journey: Transforming the Canadian housing finance ecosystem with emerging technology (white paper, via “Blockchain in the housing industry”) — Canada Mortgage and Housing Corporation, published May 1, 2021. Checked 2026-10-12.
5. Introduction to smart contracts — ethereum.org. Checked 2026-10-12.
6. Santander launches the first end-to-end blockchain bond — Banco Santander, September 12, 2019. Checked 2026-10-12.
7. Figure Technology Solutions, Inc. prospectus (Form 424B4, initial public offering) — U.S. Securities and Exchange Commission (EDGAR), September 11, 2025. Checked 2026-10-12.
8. Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets (Release No. 33-11412) — U.S. Securities and Exchange Commission and CFTC, March 2026. Checked 2026-10-12.
9. CSA Staff Notice 46-307: Cryptocurrency Offerings — Canadian Securities Administrators (copy hosted by FCNB New Brunswick), August 24, 2017. Checked 2026-10-12.